Despite some recent concern about slowing volume of commercial real estate sales, the outlook for commercial real estate continues to look good. Several national real estate publications and research groups have noted that the total volume of commercial real estate sales has declined in 2016 and 2017 compared to 2015 by as much as 11 to 23 percent. They also point out that 2015 was the strongest year on record for investment sales with volume totalling $581 billion. After 2015, 2016 was the second strongest year on record with $508 billion in total commercial sales. However, as a real estate investor, you need to understand the forces that create real estate value and if those forces are still in place.

In the past in the mining industry, miners would carry canaries into the mines as an early warning against dangerous deadly gases. Signs of distress from the birds would indicate that conditions within the mine where unsafe. With the current economic expansion in its eighth year, are there early warning signs that the real estate market, particularly for high-end luxury homes, may be in for a correction? This economic expansion is one of the longest on record. Whether you’re buying, selling or developing, timing is everything in the real estate market.

Since the Great Recession bottomed in 2009, luxury real estate around the world has experienced a phenomenal increase in value. Markets from New York, London, Hong Kong, and Monaco to Aspen have seen high net worth buyers push real estate prices to record levels. Monaco tops the list as the most expensive residential market in the world with an average sales price per square foot of $4,500, followed by Hong Kong and London at $3,000 and $2,000 per square foot respectively. New York at $1,860 per square foot and Aspen at roughly $1,500 per square foot are the most expensive markets in the United States.

Demographic trends are the key to predicting future values and the next big opportunity in real estate. Changes to the age and makeup of our country’s population is what drives basic economic forces of supply and demand. When you overlay technological advances and changes in social patterns, a more accurate picture emerges of what new opportunities may lie ahead for real estate investors.

One hundred years ago, if you were riding your horse down the Main Street in any city in America, you might have spotted an early version of the automobile, or as they were called back then a horseless carriage. Little did you know at the time, but that contraption was going to change life in America in a dramatic way. The automobile changed the way we lived and where we lived. It also changed the way we used real estate. 

Retailers across America are closing stores at a record pace. The commercial brokerage industry projects that over 8,600 retail locations will close in 2017, which is greater than the number of closings during the Great Recession of 2008 through 2009. The future of malls is in question as major anchor department stores continue to report declining sales; with long standing retail giants like Sears near bankruptcy.