This has been quite the year – real estate insanity, industry consolidation (along with the continued rise of boutiques), political craziness, stagnant economy, record corporate profits (again), off-shoring/re-shoring/near-shoring. All in all this has definitely continued to drive structural changes to the CRE environments.
Commercial real estate is a micro-cosm of the country as a whole. Changes in any given area have an impact on how organizations look at real estate. From my perspective, it has very much been a year of hesitance. Slow first 3 quarters followed by an absolutely wild 4th quarter. A lot of it driven by politics (something about a cliff), corporate budgets, and continued future uncertainty.
The biggest story to me though has been the resurgence of optimism for US manufacturing. Obviously Apple has been the lead story, but where Apple leads others follow. America has had a very strong manufacturing presence throughout the last 50 years regardless of what the newspapers have said. With the positive press it could precipitate a few more big wins which would continue to do wonders. Particularly because manufacturing supports the secondary and tertiary communities more than the metros.
Those secondary and tertiary communities are the other story for me this year. It seems that all of the economic uncertainty has continued to impact them the most and led to net migrations into larger markets. A continuing business focus on risk mitigation has also led businesses to focus on moving to these same larger markets. It’s a self-fulfilling cycle.
Now on top of all this, there has definitely been a growth in independent businesses. Particularly in the online sector. It will be interesting to see if these businesses experience any particularly greater growth than in years past. My take on this development is that we will see a growing acceptance of the 2 to 15 person businesses and their owners won’t necessarily be looking to grow beyond that. A new rise in that size of organization may actually help the tertiary and smaller markets stabilize while driving diversity in the retail sectors.
All in all I am feeling very good about the direction of CRE. I actually think 2013 will be a year where a lot of the confusion clears up. We’ve been in an extended period of uncertainty over the past 5 years and I have seen a lot more strategic planning occurring this year than in any of the last few.
Let the New Year come!