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Chris Bell

Four Socio-Political Issues Affecting Commercial Real Estate Today

With everything from violent activities of extremists to the rising sea levels affecting the commercial real estate market today, today’s real estate professionals have a lot on their minds.

Let’s be clear about one thing – no industry can operate in a vacuum – so naturally, the real estate industry is no exception. At its core, the industry is about people – where do they love, where and how do they works, so on and so forth.

Reactions to different political events and economic developments are naturally reflected in the real estate market. Therefore, today we’re taking a look at four current issues that will have a huge impact on commercial real estate in the following few years…

1.    Climate Changes

Let’s start with something people and governments around the world have little to no control over… Climate changes… By the end of the century, according to recent research from Intergovernmental Panel on Climate Changes, the sea levels in the Atlantic and Gulf Coast are expected to rise for more than 14 inches. This could cause a lot of damage to commercial properties around the globe.

In order to prevent this, coastal cities need to prepare a climate action plan. However, the problem is, flood prevention criteria – like minimum elevation heights – are still new, which is why coastal developers are still working out standards for proper construction of building formations.

2.    Income Inequality

You already know about the historic gap between the one-per-centers – the wealthiest people in America – and the rest of the country. But for the past three to four decades the problem has been growing quite a bit. And today, the gap between the upper and middle-income families is actually the largest ever recorded.

Once again, according to Pew Research, upper-income homes now make almost seven times what middle-income homes make. And if we look at the issue at the global scale, things are even more distressing – according to PBS research, 80 wealthiest people in the world hold more money than the bottom 50% of Earth’s population combined…

3.    Generational Disruption

At the moment, baby boomers (74 million) and millennials (75 million) are the two largest generations living in the United States, according to recent Pew Research statistics. Together, they make a large majority of the adult population in the States, and understandingly, they have a large influence on retail, office and housing trends in the country.

The younger generation values public transit access, so called walkability and experience over materialism – at the same time, they are harboring dreams of home ownership. Accordingly, a number of suburbs in the country are becoming urbanized – which is why we’re seeing so many co-working offices, dining and retail options in the suburbs, on par with downtown city neighborhoods.

4.    Political Uncertainty

Nationalist sentiments have been bubbling in countries across the Western Hemisphere for the last couple of months. In addition to Brexit, we had the controversial US and Australian elections last year. The months that followed have only increased uncertainties about trade politics and immigration laws across the world.

This of course has jeopardized domestic and even forgein property investments. On local and state fronts, political issues have made it difficult for most politicians to solve crises in affordable housing and infrastructure.In order to stay on top of things, investors have to stay fully informed about the prices of commercial property and the possible political changes in their country.

Final Thoughts

As you can see, these socio-economic issues have a huge influence on the real estate industry as a whole. So naturally, considering their implications of these issues has become a crucial part of the decision-making process for any real estate professional out there.

In order to stay competitive in today’s market, real estate investors have to keep an eye on the ever-changing political climate at all times. Only those who are able to adept and adequately react to the changes will be able to prosper and persevere in the real estate market.