Emerging Trends in Real Estate 2022
After a seismic shock, surprising resilience.
In a recent PWC and Urban Land Institute report, they outlined several major trends shaping the Commercial Real Estate market and how’s its roaring back to life.
One certainty: Credit Unions must build flexibility and the capacity to adapt quickly to market changes.
Credit: pwc.com and Urban Land Institute
1. ESG and Climate Change
What does that mean to the property sector? A lot. The sector is the largest contributor to greenhouse gasses and global warming. Buildings account for upwards of 40% of global energy use and carbon emissions. Sector leaders and investors are ideally positioned to play a leading role in muting climate change’s worst effects. But many aren’t convinced. Executives and investors often talk up environmental, social and governance (ESG) values, but many executives remain skeptical that ESG pays off in enhanced returns.
Climate change can seem to be an intractable problem, too big to solve. But the property sector is ideally positioned to help reduce impacts and increase resilience to environmental risks.
2. Deals and Investor Capital
Where’s all that money going? No surprise that buyers are snapping up industrial assets and housing, both single- and multifamily, a trend that hasn’t wavered in a decade. And we’re seeing a scramble for alternative properties like data centers, self-storage facilities and studio space to produce streaming content and student housing. More investors are plowing capital into these properties because they offer generally higher returns, often at no greater risk.
Is a bubble coming? Only if investors lose their discipline. Fund managers raised huge amounts of cash to pick off a predicted wave of distressed and foreclosed properties as the pandemic raged. But those predictions fell flat. Market fundamentals held up remarkably well. Lenders cut borrowers a lot of slack—and that paid off for the most part. Most investors and lenders maintained restraint during the pandemic, limiting leverage and generally not overbuilding.
“The impact from the pandemic was less than the real estate industry expected at this point last year. Now the industry should use its good fortune toward both preparations for continued uncertainty and making strides toward ESG improvement.”
Byron Carlock Jr. – Real Estate Leader, PwC US
See Full PWC Report – here
Despite the challenges the commercial real estate industry has a positive outlook for 2022 and beyond.
With a steady hand, Extensia Financial is your go to partner in navigating a challenging market.
With over 20 years of experience, Extensia / AVANA Capital is one of the most seasoned credit union service organizations focused on commercial real estate.
We provide conventional financing to businesses in a variety of asset classes — from retail, commercial, and multi-family housing projects to self-storage facilities and other special-use properties.
Our loans range in size from $2M to $25M and generally have terms of five to ten years with amortization of up to 30 years.