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Economic trends that are affecting real estate demand

8/20/2016 | Real Estate Blog

Paying attention to economic trends may be helpful to those in Pennsylvania who are looking to invest in commercial real estate. Changes in demographics, geopolitical issues, decreased lending and shifts in consumer spending are just some of the factors that can influence commercial real estate prices. Unemployment statistics and the income levels of middle class households are other factors to consider.

According to a recent study by Pew Research, middle class income has been decreasing. From 2000 to 2014, the median income for middle class families went down by 5 percent as the cost of living went up. At the same time, people in the Millennial generation have been struggling financially, and many people in this age group are remaining in their parents’ homes for longer than past generations.

Millennials and baby boomers are competing for affordable housing in the same markets, and both generations tend to want a lot of urban amenities. Home buyers and renters are looking for housing in urban areas where they can live, work and socialize in the same walkable area. Suburbs are now catering to these kinds of demands by urbanizing, and builders are creating micro apartments that can meet the lifestyle and financial needs of Millennials.

Another trend that is affecting commercial real estate is the decrease in spending at brick-and-mortar retailers. Retailers are now moving their focus to online stores, and malls are either shutting down or adapting to the demand for more experiential destinations. A commercial real estate investor who would like to invest in a new property may want to talk to an attorney about realty trends. An attorney may be able to recommend markets that are experiencing growth in the current economic climate.