Moderate commercial growth expected in 2014 but obstacles will rise

New technology is one area a new industry outlook pointed to examine.

Through the first three quarters of 2013, the commercial real estate sector has been able to bounce back after lethargic gains deriving from the burst of the housing bubble and ensuing recession.

Now, an outlook designed to look at the top trends in commercial real estate believes the industry will face obstacles in 2014 from a number of angles.

The report comes from the Deloitte's Commercial Real Estate Outlook, which has been published annually for the past 15 years.

"As 2014 approaches, the industry will face challenges stemming from government regulations, the limited availability of capital for certain properties and the impact of technology, which is becoming a driving force in every market segment – from retail centers to office space," said Bob O'Brien, a partner at Deloitte Services LP and head of Deloitte's real estate practice.

The outlook from Deloitte is based on original research alongside the experiences of many of the company's leading real estate professionals.

O'Brien pointed to supply and an economy on the rise as leaders for the 2013 commercial real estate comeback. The Deloitte report also stated that stronger leasing activity has helped propel the market, and both rent and occupancy levels have stabilized.

"The commercial real estate sector has rebounded, thanks to an improving economy, strong investor demand for quality properties and limited new supply, and it is looking to build on this momentum," O'Brien said.

What to thinking about heading into 2014
Some of the main factors to take note in 2014 include globalization, commercial real estate fundamentals, macroeconomic fundamentals and the single-family housing market.

Globalization, for example, has helped the U.S. commercial sector to recover as international investors have increasingly purchased properties and brought interest into a lackadaisical market. Deloitte's outlook expects the trends to continue in 2014 as cross-border investing proceeds to pick up steam.

Meanwhile, commercial real estate fundamentals are starting to change due to new technology. As tenants utilize advancing technology to makes change to their work forces, landlords and property owners will be faced with leasing decisions in order to keep up, which may require some redesigns and investments in order to keep up with competitors.

One segment that's shown flashes of both good and bad comes from real estate investment trusts (REITs) and private equity funds. While they have continued to boost levels of capital, REIT stocks haven't performed as expected due to increases to interest rates.

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