Hottest CRE Markets of 2022

            According to the National Association of Realtors, there are several cities in Florida leading the pack this year in commercial real estate (CRE). Orlando, Miami, Palm Beach, Fort Lauderdale, and Fort Myers all place in the top 16 CRE markets so far this year in NAR’s Metro Market Conditions Index. In fact, according to globeST, Orlando has had the fastest growing market in the country from Q2 2021 to Q1 2022. Although Florida’s markets are hot right now, there are quite a few other southern cities standing out in the CRE market, including Austin, TX, Atlanta, GA, Nashville, TN, and Phoenix, AZ.

            Why are these cities thriving in the last few months? What many of them seem to have in common is that they are growing metros with a thriving cultural scene, large research universities, and emerging tech centers that allow a higher rate of growth and absorption than other areas. Austin especially has benefitted from a massive in-migration from larger cities, like those in Silicon Valley. This sudden population increase has helped Austin to grow in all sectors and created demand for all kinds of commercial real estate spaces.

Driving Trends of the CRE Market

            One trend driving the growth of commercial real estate is the continued return to in-office work post-COVID-19. Although many workplaces are shifting to a hybrid work environment, there is still a major transfer back to the office happening now and in the past few months. With this move, the demand for office space is steadily increasing, especially in smaller metropolitan areas. During the period of COVID when many people worked from home, there was a major migration out of large metropolitan cities like New York, which is why there is higher demand now in growing cities as opposed to larger, more established ones.

            Another major trend continuing through 2022 is the increased need for industrial space. During COVID, brick and mortar retail has been chipped away even faster than before by the rapid growth of e-commerce. However, essential brick and mortar retail continues to remain stable as stores like groceries and pharmacies seem to avoid being pushed out by online stores.

            In the coming months, real estate investors should be looking towards growing cities in the southern United States with emerging population and research centers in order to survive the changing economic environment of this year so far.

Submitted by KJ Worley