Last year was a banner year for the commercial real estate industry and it was felt in every market across the U.S., including Baton Rouge. Cash liquidity was high, interest rates were low and investments were being scooped up at a fevered pitch. This of course had many commercial real estate Baton Rouge insiders beginning to hear the faint murmur of “bubble” talk. Although it makes sense that investors got skittish given current global economic conditions, and no one wants to repeat history, but with market fundamentals strong, as well as the U.S. dollar, 2016 has seen a great start for commercial real estate investments.
With the first quarter of the year under our belts it’s time for a 2Q16 gut check. Below we take a quick glance at market fundamentals and CRE trends affecting commercial real estate investments for the coming quarter.
[bctt tweet=”Want to take a peak into the #BatonRouge #CRE crystal ball? See what’s ahead for 2Q16 here:”]
Top Commercial Real Estate Baton Rouge Trends
While transaction volume this year has slowed a bit, as expected, investment activity has been steadily increasing. The property landscape for 2016 looks very similar to 2015, but with new emerging trends and economic disrupters joining the party, it takes discerning investors to fully maximize opportunities.
While the commercial real estate market in Baton Rouge is very much ripe for investment having experienced dynamic economic development over the past 12-months (to delve into that topic further, see our recent blog post about Louisiana’s recent notable business climate rankings), in order to maximize returns it would be wise to stay on top of the following trends and disrupters for 2Q16.
Yes, in December the Fed raised interest rates for the first time in seven years, but don’t expect it to negatively affect CRE investments just yet. Experts are positive about strong market values and there are many factors that are currently keeping rates low…for now. Also, don’t worry about the cap rate spreads as NREI reports, “Currently, there is little indication that the first rate increase will push cap rates dramatically higher.”
In his 2016 CRE Market Outlook, SVN President and CEO Kevin Maggiacomo talked about this year’s theme of global uncertainty and how investors shouldn’t be scared of the current market as, “uncertainty breeds opportunity”. This uncertainty surely has bred opportunity for domestic CRE investments since international investors view the U.S. market as a ‘safe haven’ in the current economy. This past quarter we have seen continued (and elevated) international capital flows into U.S. real estate assets and this trend is expected to continue.
Office Space Disruption
Office space design trends absolutely affect the sale and lease of office CRE in Baton Rouge and beyond, and a lot has changed for the office over the past 30 years. Since physical space is developed for its use, it’s no wonder that office space has evolved so radically, as the manner in which we work has been completely redefined. What we’re seeing as office space brokers is a more flexible office that is designed for employee experience featuring open, shared space…and less drywall. We now see office space that contains just 17% of closed/private space, which means lower construction and tenant improvement costs. For a deeper look into office space trends, click here.
Commercial Real Estate Baton Rouge Experts
In 2Q16 or 2Q28, there will always be new CRE trends and disrupters affecting domestic and global investment markets. The successful investor needs to stay ahead of the curve if they want to see maximum profit, but more than that they need the direction and assistance of an expert. The dedicated team at SVN | Graham, Langlois & Legendre has weathered many commercial real estate storms and seen Baton Rouge trends come and go, all the while advising clients to the way of maximum returns. If you want more insight into the Baton Rouge commercial real estate market, or need help with a transaction, contact us today.
About Us – The team at SVN | Graham, Langlois & Legendre has over 99-years of combined experiencing helping clients across the Baton Rouge area get the most value out of their CRE investment. Contact one of them today with any questions you may have and start seeing the returns in a market that will make sure to give today, tomorrow and for the extended future. To reach us, you can call us at 225.367.1515 or you can send us a message on our website. You can also follow us on Twitter at @svngll or on Facebook.