The commercial real estate market in 2023…what a roller coaster, huh?
Real estate values limbo-danced under ever-lowering bars.
The office market? Oh, it’s been like a mystery novel written by a squirrel—lots of activity, no discernible plot, and every twist more baffling than the last.
Retail teetered at a crossroads of transformation while industrial continued its Cinderella story.
Meanwhile, multifamily sectors stood like lighthouses amidst the tumultuous tides.
As we turn the page to 2024, here’s our predictions for the new year.
OFFICE
In 2024, corporate decision-makers will face even more complex choices regarding office spaces, primarily influenced by remote working trends.
Managers, trying to get workers back into their seats, will be thinking of creative ways to create some FOMO amongst the homebound.
There will be growing speculation that the office of the future may become a primarily social space.
And as real estate technology continues to advance and remote working trends solidify, the need for traditional workspaces will diminish and bland, pre-COVID office will be hopeless.
Instead, for some employers, offices could transform into venues for socializing, team-building, and ideation. Employees may only visit the office for scheduled collaborative sessions, networking events, or perhaps even retreats, rather than daily work.
This dramatic shift would redefine the very concept of an office, prompting significant debate about the merits and drawbacks of such a change.
While this idea undermines traditional office concepts, it may foster a work culture that is more flexible, creative, and focused on human connection.
INDUSTRIAL
2024 will continue to bring significant challenges for businesses making decisions about their industrial facilities.
Key issues include finding the right balance between automation and labor, managing increased demands from the rise of e-commerce, and addressing energy efficiency and sustainability concerns.
In 2024, we may see the start of infill warehouse spaces having the potential to double as community hubs. As e-commerce continues to surge and consumer demand for speedy delivery rises, new warehouses are increasingly being built in more urbanized, densely populated areas.
Modern warehouses will be in demand, leaving older in-town warehouses out of favor with traditional warehouse tenants. But there proximity to communities could lead to warehouses serving as community centers or public amenities.
They could offer public services or recreational facilities, like indoor sports arenas or farmers’ markets.
This dual-use concept could maximize the utility of these spaces and serve community needs, but it also raises concerns about zoning, noise, and traffic.
There will be a lot of questioning of whether warehouses, and the traffic they bring, are desirable—a debate that could influence the future of the Carolina’s urban areas.
The good news is that construction costs may be slowing their rate of increase; as per CoreLogic, industrial construction costs fell in 2023 by 6.2% as of November 1, 2023.
LAND
Navigating the complexities of new zoning codes and jurisdictional regulations will continue to be a significant challenge for developers, which will put downward pressure on supply—resulting in housing prices to blow through the roof in 2024.
Stricter regulatory measures and a shift towards “form-based codes,” which focus on building forms rather than land use, increase new development approval complexity, duration and costs.
Additionally, resistance by NIMBYs to affordable housing and warehouses will require developers to substantially adjust their entitling strategies. These changes necessitate that developers be proactive, adaptable and more persistent than ever.
WHAT DOES IT ALL MEAN FOR YOU?
For busy leaders, making astute real estate decisions in 2024 may feel like solving a Rubik’s cube blindfolded.
But fear not! Cardinal Partners is here to offer clarity amidst the chaos, ensuring you meet your goals without turning your hair as white as Santa’s beard.
If you’re trying to find new purpose and meaning in your own office space, or leverage your industrial space profitably, or simply protect and get the most out of your property…let us know.
We’re here to help you navigate 2024, and we have plenty of tools to help you do so, from real estate strategic planning and negotiation deal prep to best-of-class brokerage services for office, industrial, and land assets.
