Everyone depends on the weather forecast for their outfits, mode of transportation, and weekend plans. Have you ever thought of reading the real estate forecast for 2019 to check up on the market status? Now that we are almost six months into the new year, what have we seen thrive, change, and possibly affect 2020? Are you ready to buy commercial real estate in Chicago?
Office Construction Decrease
In 2018, office construction was successful because of high demand. However, for 2019, office construction might not have positive results. Developers may begin pulling back on construction due to costs, real estate cycle concerns, and even zoning problems. It’s projected that about 55 million square feet of new office construction will take place in 2019, which is an 18 percent drop from 2018’s 68.4 million square feet.
Opportunity Zone Program
In 2017, the Opportunity Zone program was created by 2017 Tax Cuts and Job Acts. This leverages private capital. As part of the program, investors are able to invest in capital gains in an Opportunity Fund. Opportunity Zones can pump equity into distressed communities with less risk than existed before created funds. According to Globe St., people are wary of how the Opportunity Zone will play out and how funds will impact communities that are supposed becoming gentrified.
Inflation and Interest Rates
Even though commercial space is concentrated in large buildings, those buildings are a relatively small number of the overall stock of commercial buildings. According to the National Association of Realtors, in Q1, “investment sales in LCRE markets accounted for $562.1 billion during 2018, a noticeable 15 percent increase.” Deal volume has advanced for all property types, save development sites.”
Millennials Living In The City
Convenience is key. At least it is for the millennials, who are “willing to stay in the urban market longer and trade square footage for a convenient location.” According to JPMorgan, there is a greater increase in value and need for buildings in the heart of major cities due to the younger people who rent in the urban market. It’s easier to work in an area where you work and socialize, no matter how small the space may be. City-living helps boost commercial real estate and will continue to as the post-millennial generation begins to graduate from college, enter the workforce, and more into urban living.
Always reach out to Frontline Real Estate Partners for our blend of passion, ability, and sophistication when it comes to helping you with buying commercial real estate in the Chicago area. We’d love to hear from you. Let’s get in touch today. Email, call, or visit us today for more information about commercial real estate in Chicago.