Market dynamics can cause consumer behavior to change. Simultaneously, evolving consumer preferences tend to shift some of those same market forces. To be sure, people at large don’t control emerging technologies. But the individual adoption of tech changes how and when people shop, including what they expect from the commercial sector. For example, if you were of age in the late 1990s, your expectations for ordering something online likely differed from today’s ordering.
You dealt with the slowness of dial-up connections but were still excited about this new convenience. Maybe you could browse for a few items you knew would be foolproof, such as books and non-perishable foods. Sure, you had to wait a week or so for your purchases to arrive. Yet, you felt like you were on the cutting edge of a different way to shop. Now, waiting a week seems impractical, and you want the ability to virtually try higher-stakes items beforehand.
It’s one example of how changes in market forces and consumer behaviors intersect. And this co-mingling is why commercial real estate opportunities can emerge for investors. Let’s see how shifts in consumer behavior are opening up doors.
An Increase in Housing Demand
One of the rules of Econ 101 applies to real estate. When there’s an increase in the demand for housing, it signals potential growth opportunities. Those new residents need a roof over their heads, whether it’s single-family homes, apartments, or mobile homes. They also need places to shop, work, and enjoy life. The demand for commercial real estate, including community-oriented spaces, increases alongside the need for more housing.
A population surge in growing cities also puts pressure on the need for affordable housing. As supply tightens, sprawling homes with expansive yards get expensive. The average person may think those prices are out of reach, but their dreams of owning a home aren’t. They just need to find more economical options.
This is where opportunities for investing in properties like mobile homes can emerge. It’s a way for investors to expand their portfolios while offering or maintaining an area’s housing affordability. When it comes to mobile home parks, Lifestyle Investing expert Justin Donald says, negotiating seller financing benefits both parties. Properties “can be sold more quickly and for less money.”
You don’t have to wait for a bank and might get a break on some of your closing costs. The seller benefits from a quicker sale without having to make some of the repairs lenders demand. You might also discover potential business partners and future deals through your relationship with the seller. Expand your network so you can build organic relationships that lead to the next deal.
Mixed-Use Neighborhoods
Drive through older, established neighborhoods and you’ll usually see nothing but houses. The homes have generous space between them with lot sizes some buyers might envy. As housing demand and construction costs have shot up, lot sizes like these are no longer the norm.
You’re more likely to see a mix of single-family homes squeezed more closely together. You’re also more likely to see a mix of other types of housing and commercial buildings in the neighborhood. Adjacent to the single-family lots are apartments and townhomes. Go a bit further up the block and you have a thriving strip mall with drive-thru restaurants.
Throw in a community park with an outdoor amphitheater and you’re in a mixed-use landscape. People want convenience and expect these developments handed to them. They don’t have to drive down the road to grab a bite, see the dentist, or have their beloved pet treated by the vet. It’s all within walking distance, providing a holistic living experience.
Mixed-use neighborhoods give commercial real estate investors additional opportunities. It can be getting involved with a new build or assuming ownership of existing retail space. The proximity of these spaces to consumers attracts diversity as retailers see the potential for steady foot traffic. As mixed-use developments appeal to a wider range of residents, so will the chances to offer commercial space to various tenants. Think daycares, wine and coffee bars, and gyms.
Distribution Centers
Technology has made it possible to shop nearly anywhere without leaving your physical location. With a few taps on your phone, you can buy what you need and have it delivered. Alternatively, you can pick up your shopped-for items later. It’s fast and intuitive, qualities consumers have come to embrace and expect.
However, being able to deliver the products shoppers are buying online means having robust, local supply chains. Without warehouses, distribution centers, and retail footprints, brands can’t fulfill orders as expected. Plus, consumers’ ever-driving need for faster and more innovative delivery creates the need for commercial space.
It’s much easier for companies to get orders to you overnight or within hours if the supplies are next door. Brands don’t have to wait for products to arrive from a far-away distribution center if there’s one down the road. With the right facilities, shippers can establish local fleet networks, increasing the number and frequency of deliveries. In turn, nearby distribution centers and warehouses create jobs to support growing communities.
Commercial real estate investors who buy or build properties that support local supply chains get in on the ground floor. You’re helping to bring business to the area while diversifying the assets in your portfolio. Converting spaces may also be an option in areas in need of logistics to support e-commerce activities. Growing local supply chain demand may make otherwise overlooked properties a profitable investment.
The Link Between Consumer Behavior and Commercial Real Estate
Some aspects of consumer behavior remain the same. People need places to live, work, and play. Yet, the ways consumers meet those needs change as various factors like technology and globalization evolve. It’s not enough anymore for companies to launch an online store with flagship products that take weeks to arrive. Consumers expect to get anything within 24 hours or less using an app, a website, or a voice-assisted device.
At the same time, residents moving into an area want everything nearby. The increasing need for neighborhoods to cater to diverse housing options, retail, and community spaces means more prospects for commercial investors. Find where people are going and there will be opportunities to invest in ways to support their sustainability.
