{"id":1004637146,"date":"2023-01-04T15:28:24","date_gmt":"2023-01-04T23:28:24","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004637146"},"modified":"2023-01-26T06:56:12","modified_gmt":"2023-01-26T14:56:12","slug":"top-10-commercial-real-estate-trends-for-2023","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/top-10-commercial-real-estate-trends-for-2023\/","title":{"rendered":"Top 10 Commercial Real Estate Trends for 2023"},"content":{"rendered":"

In 2022, spiking interest rates, inflation and a war in the Ukraine brought considerable change to commercial real estate and the U.S. economy overall. With interest rates and values expected to stabilize, and all stakeholders rethinking the highest and best use of their property and capital, this year promises to be an interesting one, too.  Here are 10 trends likely to shape the events and transactions of 2023. <\/p>\n\n\n

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READ THE DIGEST<\/a><\/div>\n<\/div>\n\n\n

\u00a0<\/p>\n

Rezoning Frenzy<\/h2>\n

In U.S. cities that zone commercial real estate, developers are prodding city councils to consider rezoning some districts to residential<\/a>, said Shaun Pappas, a partner at Starr Associates LLP.<\/p>\n

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READ ALSO:<\/strong> What\u2019s Ahead for Coworking in 2023<\/a><\/p>\n

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This trend has been underway for some time in Manhattan. Pappas believes it will become a greater movement as commercial vacancies increase and residential real estate continues being squeezed. With the housing market stifled by rising mortgage rates, creating more housing development opportunity could ease home prices.<\/p>\n

Green Goals<\/h2>\n

Almost 40 percent of U.S. greenhouse gas<\/a> emissions derive from building construction and operation, said Eve Picker, crowdfunding platform SmallChange.co founder & CEO. Developers and property managers must ensure building efficiency and sustainability, or risk being ignored by tenants and financiers alike.<\/p>\n

\u201cThe new normal isn\u2019t just about embracing \u2018green,\u2019 it\u2019s about avoiding \u2018red,\u2019\u201d Picker said. \u201cIf your operational or development costs start to show up in that color from a maintenance or climate risk standpoint, you\u2019ve got no hope of being in the black.\u201d<\/p>\n

Credits and Incentives<\/h2>\n
\"\"<\/a>

Image by Dmitrio Lychany\/iStockphoto.com<\/p><\/div>\n

As companies look to rebound from the pandemic, tax credits<\/a> and incentives should play an even more vital role in launching projects, said Nancy Cox, partner and real estate industry leader for Top 50 accounting firm The Bonadio Group. To maximize profits, CRE execs will need to consider Low-Income Housing Tax Credits, Qualified Opportunity Zones and Historic and Brownfield Tax Credits, she said.<\/p>\n

Stable Market<\/h2>\n

In the coming year, commercial real estate buyers and sellers will encounter a more stable market likely to furnish buyers with greater options, said Tomas Sulichin, president of the commercial division at RelatedISG Realty. The market, he believes, will be characterized by a slight increase in inventory.<\/p>\n

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READ ALSO:<\/strong> ULI, PwC Pick These CRE Trends to Watch for 2023<\/a><\/p>\n

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\u201cIn the past years, buyers and tenants have been at the hands of owners and landlords,\u201d he said. \u201cWe will soon see a market stabilization. These are all good signs of a healthy real estate market, which is cyclical.\u201d<\/p>\n

Top Tenants<\/h2>\n

Commercial real estate owners will aim to ink golden anchor tenants to long-term leases, Pappas said. \u201cThere\u2019s a big push for long-term leases with significantly established tenants in restaurant spaces, technology or other types of \u2018experience\u2019 leasing, such as large fitness centers and spas,\u201d he noted.<\/p>\n

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READ ALSO:<\/strong> How Deals Will Fare in 2023<\/a><\/p>\n

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\u201cI see commercial landlords looking for those types of tenants that are established and sacrificing significant rent or providing significant tenant allowances so they can lock in long-term leases.\u201d<\/p>\n

Transaction Restart<\/h2>\n

With high interest rates producing elevated cap rates and declining asset values, there will be insistence on higher returns on real estate investments than on alternatives providing less risk and more liquidity. \u201cIlliquidity demands a premium, and that\u2019s become more and more apparent as rates rise,\u201d said Ran Eliasaf, founder & managing partner of Northwind Group.<\/p>\n

\u201cWe\u2019ll see more transaction volume take place in 2023,” he continued. “Some lenders will force the hands of borrowers to make the transactions a reality, and there\u2019ll be refis of deals done four years ago…not everyone will walk away happy.\u201d<\/p>\n

Race to Bottom<\/h2>\n
\"\"<\/a>

RAL Cos. selected Aldi to anchor their 14-story, 624,575-square-foot mixed-use development in Philadelphia. Above the retail, the property features 478 rental units.<\/p><\/div>\n

Prospects for office real estate<\/a> will continue to be clouded, with occupancies lower and office tenants re-evaluating their needs in the face of remote work.
\u201cIt may get worse before it gets better; that trend will hold,\u201d said Mitch Rosen, managing director and head of real estate for New York City-based Yieldstreet.\u00a0\u201cI think there\u2019s somewhat a race to the bottom on price for some of the more inferior buildings. You\u2019re not competing anymore on what the tenants are looking for. You\u2019re competing on dollars. There are tenants for that appeal, but not high enough quality or quantity.\u201d<\/p>\n

15-Minute Cities<\/h2>\n

The pandemic deepened economic pressures and social inequalities existing before COVID-19, leading Americans to seek greater access to amenities, activities or job opportunities nearer their homes.<\/p>\n

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READ ALSO:<\/strong> The 2023 CRE Outlook \u2013 Top CEOs Weigh In<\/a><\/p>\n

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\u201cThe idea of the 15-minute city<\/a>, where you can do all things you need to do within 15 minutes, has taken off since the pandemic,\u201d said Karin Brandt, founder & CEO of coUrbanize, a community engagement platform for real estate development.<\/p>\n

Brownfield Cleanups<\/h2>\n

ESG\u2019s impact on real estate will be reflected in an increase in brownfield cleanups. In New York State, for example, the Brownfield Cleanup Program incentivizes the remediation and redevelopment of eligible contaminated properties by letting taxpayers reduce their taxable income by the cost of eligible cleanup expenses in the year they\u2019re incurred.<\/p>\n

\u201cThe credit is for between 22 and 50 percent of qualified remediation project costs and\/or 10 to 22 percent of eligible construction costs,\u201d Cox explained. \u201cThe credit percentage varies based on the version of the program the project qualifies for and the level of contamination.”<\/p>\n

The credit can be claimed for various time lengths depending on credit component following the issuance of a certificate of completion by the New York State Department of Environmental Conservation.\u00a0<\/p>\n

Flight to Quality<\/h2>\n

Some forget, Rosen said, that there is still plenty of dry powder in real estate that will need to be invested in the next 24 months, referring to the “tens and hundreds of billions\u201d raised in 2021 and 2022.<\/p>\n

\u201cIt will be a flight to quality, better assets, better markets,\u201d he said. \u201cIf you own superior assets the liquidity should be better than in tertiary markets and poorer assets. A rising tide lifts all ships. The first to see that investment will be the better-quality assets.\u201d<\/p>\n

Read the January 2023 issue of CPE.<\/em><\/a><\/p>","protected":false},"excerpt":{"rendered":"

Industry experts offer a peek at the year ahead. Few are expecting business as usual.<\/p>\n","protected":false},"author":450,"featured_media":1004637148,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21781,1521,21783,21786,21787],"tags":[],"class_list":["post-1004637146","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate-real-estate","category-digital","category-investment","category-sustainability","category-technology"],"acf":[],"yoast_head":"\nTop 10 Commercial Real Estate Trends for 2023 - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/top-10-commercial-real-estate-trends-for-2023\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Top 10 Commercial Real Estate Trends for 2023\" \/>\n<meta property=\"og:description\" content=\"Industry experts offer a peek at the year ahead. 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