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Gazing into the crystal ball is never easy and sometimes dangerous, but the increase in available technology has given us data that helps make predictions more reliable.
But even big data is not always right. In December 2018, for example, Coldwell Banker Real Estate (CBRE) predicted a 2.7 percent growth in the Gross Domestic Product. Through three quarters, the actual growth is 2.3 percent.
The CBRE 2018 analysis also predicted a strong economy resulting in interest rate hikes "leading to gradual, moderate increases in long-term rates." We have the strong economy, but interest rates are going down, not up.
As we approach 2020, real estate marketing tools such as big data, with all of its flaws, is the most reliable predictor of the future of commercial real estate (CRE). Deloitte has used big data to predict that success across the spectrum of commercial real estate will depend on "CRE companies to prioritize tenants’ and end users’ needs, given the increasing influence of technology and changing customer preferences."
Their "mantra" for 2020: "Location, experience, analytics."
Specifics of this prediction include the need for enhancing the "digital tenant experience" through the use of 3D virtual tour software to create a virtual reality for buyers, plus existing apps to help landlords and sellers in the following ways, to name a few:
• Understanding what attracts and retains tenants
• Becoming more efficient
• Creating buildings and workspaces with touches of lifestyle hotels.
• Creating an immersive experience for tenants and visitors through connections across a building’s common areas
• Connecting tenants and prospects with high-quality, in-house meal services through local restaurants to create onsite dining programs, and developing communities by providing onsite fitness programming and unique events for tenants.
Deloitte is among those firms that are expressing concern about "growing volatility of the global economy" and its effect on the CRE market in 2020.
The folks at Forbes appear less gloomy. In their report on the forecast by the Urban Land Institute and Price Waterhouse Cooper (PwC), they predict "steady real estate markets and returns through 2021."
* Continue on to Part Two of the "Commercial Real Estate Market Forecast 2020" now!
