Insights on the Commercial Real Estate Global Market to 2027
The Global Commercial Real Estate Market is expected to register a CAGR of more than 10% during the forecast period.
COVID-19 pandemic severely affected the commercial real estate sector, as travel restrictions and social distancing effected the public mobilization, commercial works and gathering facilities. Office sector, retail sector and hospitality sector are the most affected market segments during the pandemic. Furthermore, now the global market is in recovery phase, as COVID-19 protocols are relaxed, and the sales are reaching to pre pandemic levels in the market.
The significant growth in commercial real estate market is leveraged by urbanization, digitalization of the commercial sector and increasing foreign investments into the sector. For instance, in 2021 foreign investments in European commercial real estate market accounted for half of the capital investments in that region, which is almost EURO 130 million.
Moreover, Asia-Pacific, China, Canada experienced growth in office space absorption, whereas Europe and the United States saw declined rate. In addition, Asia-Pacific is leading in terms of retail sales and logistics warehouse absorption in the global market.
Key Market Trends
Office Markets to Witness Increased Growth
Office market had a strong hit by the pandemic globally. Despite the huge disruption, now the market is in recovery phase. Furthermore, Increasing investments into the sector boosting the economic recovery in the market, and officing leasing activities are also in growing.
In 2021, office occupancy experienced a robust growth of more than 80% in almost 390 metro cities across the globe. Moreover, 30 million square feet (msf) office space has been absorbed since third quarter of 2021. Meanwhile, rental growth of the sector is in slow recovery phase, EMEA experienced a significant growth in rental growth.
In addition, most of the office space is absorbed by Class-A offices with more than 61%, followed by Class-B and Class-C offices with 32% and 7% respectively.
Furthermore, Asia-Pacific (APAC) region is leading in the office market, due to population growth, GDP growth, middle class consumers, working age population leveraging the office demand. Also, the APAC region contributes more than 50% of office construction in global market.
Retail Sector is Likely to Witness Significant Growth
Despite the COVID-19 pandemic disruption, the retail real estate sector saw a significant growth which is leveraged by digitization of work, the transformation of physical retail, and the shift towards environmental, social and governance (ESG) considerations. Moreover, retail sector facing many challenges from e-commerce sector, and changing customer behavior during the pandemic. Despite these challenges the sector stood resilient, as the e-commerce sales in pandemic accounted for only 14% compared to overall retail sales.
Moreover, to meet the consumer demand and to adapt the changing retail environment, developers are focusing on different strategies. Such as remodeling shopping centers to serve multiple purposes, customizing tenant mix, developing new lease models to attract latest business models.
In addition, to meet the consumer demand some retailers are expanding their business by omnichannel strategies, such as click-and-collect, curbside pickup and ship-from-store by adopting new technologies.
Furthermore, the retail sales increased in Asia-Pacific region, followed the United States, and Europe. Also, retail sales experienced growth in different segments such as in store retails, grocery stores, apparel, departmental stores, restaurants, and bars. In which instore retail registered highest sales in 2021 compared to 2019.
Insights on the Commercial Real Estate Global Market to 2027 | www.businesswire.com