Commercial Real Estate TRENDS: 2016 Seminar Recap
This morning, many commercial real estate professionals in the Greater Baton Rouge area gathered in Baton Rouge to participate in the 2016 TRENDS in Real Estate Seminar put on by the Commercial Investment division of the Greater Baton Rouge Board of Realtors. TRENDS is a four hour seminar, jam packed with great information on the commercial real estate market across six different trend areas, and forecasts commercial real estate trends for the upcoming year. Read on to view a quick recap of five commercial real estate trends we learned today:
Here, we learned that while interest rates will probably continue to climb small amounts over the next year, it’s the regulators who are going to be the biggest concern. During 2016, supervisors from the banking regulators will continue to pay special attention to the risk associated with CRE lending. These supervisors may ask financial institutions with a large exposure to CRE lending to reduce the risk tolerances in their underwriting standards, or raise additional capital to mitigate the risk.
Another trend discussed is the continued building of new units and experts seeing net rents decrease while concessions increase. As more supply comes on the market, the demand is not necessarily growing at the same pace. The total new rental supply for 2015-16 will be 4,640 +/- units. The experts on the Multifamily TRENDS committee are expecting these concessions to be here to stay for 2016-17.
Despite the depressed oil prices, our local Baton Rouge economy has remained healthy. Also, while there seems to be less multi-million dollar deals on the market, they do continue to be announced. Since there is not a lot of speculative building happening, the greater Baton Rouge industrial market is on track to have a net absorption of 437,273+/- square feet.
While there were a few note-worthy transactions, the overall sale activity of larger office assets was slower in 2015 due to lack of available properties. The committee is anticipating that the Baton Rouge office market will remain flat through 2016, and they are expecting the majority of the leasing activity to come from expansions and relocations within our market.
According to the TRENDS seminar, while development is happening and the greater Baton Rouge area is gaining some phenomenal retail assets, the development process is lagging. This is largely due to the fact that the market is operating efficiently, there isn’t much speculative development happening. Developers of these new centers are waiting to have leases in hand before moving forward with the buildings.
Overall, these takeaways are barely brushing the surface of the information that was given to the 850+ real estate professionals who were in attendance today. As a collective group, we are grateful for the time the members of these committees put in to collect and analyze this data. To everyone who made 2016 TRENDS real estate seminar possible we thank you, and we look forward to 2017 TRENDS.
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Peter Dumaine – Peter, based in Baton Rouge, was recently licensed by the Louisiana Real Estate Commission. He graduated from Louisiana State University in May 2015 with a Bachelor of Science degree in Finance. He is focused in providing clients with the knowledge, tools and resources necessary for each specific transaction. He enjoys playing golf, sailing, slalom skiing, working on his old Jeep and spending time with family and friends when he’s not actively following the Real Estate market. To contact Peter, you can call him at 225-367-1515 or you can email him at email@example.com. You can also follow him on Twitter at @svngll or on Facebook.