The American commercial real estate market underwent a series of changes during the past few years, and with the continued advances in technology, there are a number of items that could continue to evolve in the near future.
Industrial sector growth may be heavily influenced by the boost in e-commerce during the coming years, as there could be a strong increase in the level of Class A space, according to a report from CBRE Group, Inc. Additionally, there may be a rise in speculative construction for the sector, as well as further build-to-suit projects.
"Demand from e-commerce companies has played a leading role in the recovery of the U.S. industrial real estate market over the past two years," said Scott Marshall, executive managing director for industrial services for the Americas at CBRE. "During the first quarter of 2014, virtually all U.S. markets were buoyed by strong demand for distribution space from the e-commerce sector. Supply chain demand was centered in major inland and coastal port markets, resulting in strong absorption and shrinking availability in markets such as Atlanta, Chicago, Miami and Houston."
More than 45 million square feet of speculative development already began for the sector, though it may not be enough to meet demand the report showed. Another 30 million square feet in needs from e-commerce industry members will prevent supply from getting to comfortable levels.
Architecture billings climb in May
While the commercial real estate market may be going through changes, interest in construction remains high. According to the Architecture Billings Index from the American Institute of Architects, building design requests reached positive territory in May, as the level rose to 52.6 from April's 49.6. With the figure passing 50, it entered positive territory.
"Volatility continues to be the watchword in the design and construction markets, with firms in some regions of the country, and serving some sectors of the industry, reporting strong growth, while others are indicating continued weakness," said Kermit Baker, chief economist at AIA. "However, overall, it appears that activity has recovered from the winter slump, and design professions should see more positive than negative numbers in the coming months."
The commercial/industrial sector was the second-highest figure recorded in May, as it posted 53.6, the report added. Multifamily residential was the only sector to perform better, with a figure of 58.2.