In the years ahead, the commercial real estate industry is predicted to grow by a whopping 17%. The market is poised to grow, as new projects are launched and existing ones are renovated. However, there will be several challenges in this space. In the early stages of the pandemic, urban multifamily suffered in popularity. In addition, the industry is expected to undergo tokenization, whereby commercial properties are traded for tokens.

Despite global economic uncertainty, multifamily and industrial properties have been performing well. This year's outlook is for the commercial real estate industry to continue on its strong path. In 2022, these asset classes are likely to outperform other asset classes as the country navigates the hybrid economy and learns how to best use office space. Similarly, shopping centers should continue to thrive, especially if they can attract tenants outside the traditional retail categories.

In the second part of the blog series, CBC analysts discuss how speculative industrial properties are affecting landlords and the overall market. They also look at the potential impact of build-to-rent trends on the multifamily sector. Finally, they explore how rising investment volume will impact the sector in 2022 and how these trends will affect the industry over the next five years.

The COVID-19 virus has brought down multifamily occupancy rates in most markets, but it isn't a disaster for multifamily as fundamentals have held up. In fact, rent collections were up in some markets and fell in others, with vacancy rates tightening in some cities. The good news is that the multifamily market has rebounded after the pandemic, and rent growth is on the rise.

Although the prevailing media narratives have suggested that the pandemic has hastened the decline of U.S. cities, that may not be the case. In fact, the population loss trend in U.S. metros is much slower than that in neighboring suburban counties. While the numbers may be deceiving, they are still a good indication that urban cores are slowly regaining their lost luster.

While downtown areas continue to experience robust office leasing activity, suburban office markets are still lagging. According to CBRE's annual office survey, more than half of established suburban submarkets' vacancy rates are higher than downtown counterparts. In fact, the first quarter of this year showed a greater difference between the two. Moreover, the vacancy rate in New Jersey suburbs is significantly higher than that of the New York City CBD.

While many benefits are offered by suburban office locations, they are not immune to the challenges that plague CBDs. Plunging lease rates and declining demand are two major issues in suburban office markets. However, many commercial real estate experts believe that the recession-related effects are still lingering in both the CBD and suburban office markets. However, leasing activity is picking up in smaller deals. And while suburban office markets aren't immune to the effects of the recession, they'll likely outperform their central city counterparts through 2022.

Tokenization of commercial real estate industry in the near future may be possible through a number of methods, including traditional fungible tokens and fractionalized NFTs available on the Ethereum blockchain. While real estate tokenization offers immense potential for generating liquidity in the market, some legal, regulatory, and liquidity challenges still remain. For instance, the security regulations required for real estate tokens may differ from jurisdiction to jurisdiction.

For instance, RedSwan CRE, a fin-tech company, has a unique approach to commercial real estate tokenization. The company bypasses institutional financiers and aims at smaller investors. By crowdsourcing resources from individuals, it leverages the power of collective capital to penetrate the commercial real estate market through tokenization. In the near future, the commercial real estate industry may be fully tokenized.