As a bank or credit union, the heart of your business model almost always includes commercial real estate and lending. So when trends begin to affect the market positively or negatively, it can have an impact on your bottom line as an institution.
Here are a few emerging trends that may or may not affect your own commercial lending business in the coming months.
With interest rates on the rise nationally, it's only a matter of time before investor interest in traditional property development wanes and moves toward niche markets. National Real Estate Investor® estimates that niche markets will emerge as the places of most aggressive spending, including offices - particularly in the health fields, young-adult and elderly housing and information technology hubs.
Suburban goes urban
Through the past decade and a half, the intense migration of population hubs from rural settings to urban ones is no different - it's still happening. But an emerging trend is that of the urbanization of suburbs - namely, suburbs are taking on more of the commercial development and public transportation properties of totally urban municipalities. This in turn should drive growth in domestic housing and other smaller development opportunities.
Enthusiasm in numbers
The rise of direct interaction between consumers and their favorite businesses and organizations has given way to the concept of crowdsourcing. And the commercial real estate market is feeling the push. More and more investors are looking to engage with property development, namely in tech and emerging markets. The expectation of consumer backers for these sorts of ventures should continue to grow.
With economic recovery comes the return of interest rates. As credit cards bounce back to normal rates, expect consumers to react by being cautious about purchases, be they online or in brick-and-mortar retailers. As consumer retailers feel the squeeze of lessening sales in many markets, expect a possible downturn of investment in new development projects among these big-box and mid-sized sellers.
Every community is different, and trends can affect each bank or credit union in dramatically different ways - but staying on top of consumer trends that drive business decisions can keep you abreast of what's to come.
Source: National Real Estate Investor®