The commercial real estate brokerage market is one of the most developing, challenging, and fastest-growing markets in the U.S. In 2023, it had a value of $11.3 trillion, and in 2024, it will reach $25.37 trillion. Furthermore, there is an estimation that the market will reach a value of $28.18 trillion by 2028. This reflects the high growth and huge commercial real estate market investment opportunities.
The commercial real estate brokerage market is divided into several sectors, including multi-family houses, industrial units, offices and retail spaces, student housing, and other commercial spaces. Among these sectors, there are some sectors that grow continuously and generate revenue, and some keep fluctuating with the changes in the market. These changes and fluctuations reflect the trends in the commercial real estate brokerage market.
These trends are not always the same and change year by year. This blog covers the commercial real estate brokerage market trends for the year 2024. But, before jumping into the trends, let’s explore what is commercial real estate brokerage market.
What is the Commercial Real Estate Brokerage Market?
Commercial real estate brokerage is a term used to describe the buying, selling, leasing, and management of commercial real estate properties. The real estate property includes office spaces, multi-family houses, industrial properties, warehouses, storage houses, shopping complexes, hotels, and retail outlets.
A commercial real estate broker handles commercial real estate properties on behalf of the landlords. They provide services such as property valuation, property management, negotiation, lease contract drafting, and finding potential and high-paying renters.
Commercial real estate brokers also provide valuable market insights to landlords and help them understand local market conditions, rental trends, vacancy rates, and competition in the market. They also guide the landlord on how to maximize the profit from a particular commercial property and attract potential tenants.
The services offered by a commercial real estate broker are inseparable in this dynamic market as it keeps on fluctuating and asks for attention, knowledge, and a sharp mind. Now, let’s have a look at the recent commercial real estate brokerage trends in 2024.
Top Commercial Real Estate Brokerage Trends in 2024
In 2024, several new innovations and trends are shaping the commercial real estate brokerage market. The commercial real estate market is emphasizing more on sustainability, reliability, and integration of technology to automate tasks.
Here is a detailed overview of the commercial real estate brokerage trends in 2024.
1. Decrease in Volume of Commercial Real Estate Investment
One of the most significant and common trends in commercial real estate is that the investment value in commercial properties is decreasing year over year. In 2023, there was a 47% decrease in investment, i.e., $647 billion. However, there are some sectors in commercial real estate that experienced a higher transaction value, but the overall market investment remains low.
2. Office Spaces face a Long Vaccany Period
The office spaces in commercial real estate are facing a long vacancy period due to the hybrid and work-from-home facilities. In the first quarter of 2024, the office vacancy rate was 19.8%, the highest in the past few years. As more and more people are demanding work-from-home opportunities, the vacancy rate is increasing accordingly.
3. Rental Growth in Some Sectors
While office spaces are facing a sharp decline in 2024, there are some other commercial properties that are gaining popularity in the commercial market. The occupancy rate in multifamily houses is generally anticipated to increase by 6.25%, with a focus on sustainability and smart homes. Furthermore, the retail sector is also expected to increase between 2.5% and 3.5%.
4. Student Housing Real Estate is Trending Upwards
The student real estate housing market is growing at a rapid speed. At present, the student housing real estate market valued at $10 billion and is generally expected to reach $14 billion by 2027. It is mostly observed that this market always remains in high demand as more and more international students come to the U.S. for higher education. In the year 2022, when the growth of other commercial real estate properties was stagnant or low, the student housing market generated a revenue of $18.9 billion.
5. Technology is Gaining Priority in Every Sector
The commercial real estate sector, whether multifamily housing, industrial properties, office spaces, retail outlets, or student housing sector, focuses on incorporating technology for task automation. More and more sectors are using AI-powered technologies for research, profit and ROI calculations, market statistics, tenant screenings, and simplifying other tasks.
6. Focus on ESG (Environment, Social, and Governance) Criteria
ESG is giving a new meaning to the commercial real estate brokerage market. In 2024, tenants or clients are more inclined towards environment management, social issues, and governance. As a result, more commercial real estate brokers are focusing on incorporating ESG methods and practices into commercial real estate development.
Unlock the Future Opportunities in the Commercial Real Estate Brokerage Market
The commercial real estate brokerage market always fluctuates with changes in the external environment. Different sectors in these markets, such as multifamily housing, retail spaces, office spaces, warehouses, shopping complexes, hotels, and office spaces, have different impacts on the commercial real estate market. Some sectors generate profit even when the market is slow and stagnant, while others do not.
To make the commercial real estate brokerage market investment a successful one, an individual needs to analyze the most profitable sector and predict the growth opportunities. By partnering with an experienced and efficient real estate firm like Citadel Property Management Corp., you can unlock the potential to identify the most profitable sector with maximum ROI.
Frequently Asked Questions
1. Which sector in the commercial real estate brokerage market is most beneficial?
The multifamily housing, retail, and industry sectors are most beneficial in the commercial real estate brokerage market.
2. How is technology influencing the commercial real estate brokerage market?
Technology helps in property valuation, virtual property tours, tenant screening, market research, and statistics gathering on real estate properties.
3. How has remote work impacted the commercial real estate brokerage market?
Remote work and work-from-home jobs have led to a decrease in the demand for office spaces, making it a less favorable option for investment.
4. What are the challenges faced by commercial real estate brokers in 2024?
The challenges faced by commercial real estate brokers in 2024 include adapting to technological advancements, regulatory changes, and economic uncertainties.
