NAI Martens Market Outlook 2020

2020

COMMERCIAL REAL ESTATE MARKET UPDATE

W I C H I T A K A N S A S MARKET OUTLOOK

435 S Broadway St | Wichita, KS 67202 | 316.262.0000 | www.NAIMartens.com

AFTER A STEADY 2019, WHAT’S IN STORE FOR COMMERCIAL REAL ESTATE IN 2020? R eal estate fundamentals will remain generally positive through 2021. While some key metrics may moderate, we expect no major disruptions. The strides made in public and private development in the core area and the myriad of projects under construction or in planning throughout the community have been impressive. The current economic development initiatives and a more positive outlook bode well for the future. For Wichita to continue its momentum, it will need to see job growth acceleration and a diversification of its economic base. In addition to market summaries presented herein, there are a few trends of note that are expected through the end of the year and into 2020. eal estate fundamentals will remain generally positive through 2021. While some key metrics may moderate, we expect no major disruptions. The strides made in public and private development in the core area and the myriad of projects under construction or in planning throughout the community have been impressive. The current economic development initiatives and a more positive outlook bode well for the future. For Wichita to continue its momentum, it will need to see job growth acceleration and a diversification of its economic base. In addition to the market summaries presented herein, there are a few trends of note that are expected through the end of the year and into 2020.

• Transaction Volume to Remain Steady - The market may have peaked but activity and pricing has remained firm through mid- year. While all core sectors have performed well; apartments remain the perennial investor favorite with increased interest among mobile home investors. • Opportunity Zones Craze Will Persist – Many investors are on the sidelines awaiting finalized guidance regarding the program. The hunt continues for assets and investment opportunities in designated areas that present the strongest upside potential. • Industrial Demand to Continue – Wichita is a manufacturing market and as such is not characterized by a large inventory of warehouse and or distribution facilities. Demand may increase from non-traditional uses such as e-commerce and the CBD industry. • Transaction Volume to Remain Steady – The market may have peaked but activity and pricing has remained firm through mid-year. While ll cor sectors h ve performed well, apartmen s remain the perennial investor favorite with increased interest among mobile home investors. • Oppor unity Zo es Craze Will Persis – Many investors are on the sidelin s awaiting finalized guidance regarding the program. The hunt continues for assets and investment opportunities in designated areas that present the strongest upside potential. • IndustrialDemandtoContinue –Wichita is amanufacturing market and as such is not characterized by a large inventory of warehouse and or distribution facilities. Demand may increase fro non-traditional uses such s e-commerce and the CBD industry. • Online Retailers to Open Brick-and-Mortar Stores – Physical retail is far from dead despite the number of

• Investment in Value-Add Assets - Demand for available and affordable workforce housing options will remain a topic of interest in the multifamily sector, as expensive land and development costs make it increasingly difficult to build affordable housing from the ground up. • Millennials and Empty Nesters Continue to Influence - Aging millennials now hitting their early 30s, the first phase of millennials are looking at larger, more affordable homes and access to schools. Empty nesters are gravitating to low- maintenance lifestyle communities. As a result, innovative single-family and multifamily housing alternatives will emerge. • Investors to Continue to Look at Secondary and Tertiary Markets – Commercial real estate investors will continue to look at burgeoning secondary and tertiary markets for solid risk-adjusted returns and the trend is likely to continue. store closings. Retailers are reinvesting to achieve the perfect omnichannel shopping experience for consumers. In additio , e-commerce retailers will increasingly shift to open physical stores to grow their business and retain more customers. • Millennials and Empty Nes ers Continue to Influence - Aging mil nnials now hit ing their early 30s, the first phase of millennials are looking at larger, more affordable homes and access to schools. Empty nesters are gravitating to low- maintenance lifestyle communities. As a result, innovative single-family and multifamily housing alternatives will emerge. • Investors to Continue to Look at Secondary and Tertiary Markets – Commercial real estate investors will continue to look a burgeoning secondary and tertiary m kets for solid risk-adju ted returns and the trend is likely to continue.

COMMERCIAL REAL ESTATE MARKET UPDATE | 19

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