When investors think about commercial real estate, some of the first things that come to mind are risk and return assessments, market trends, and the potential for financial gains. After all, real estate is a significant player in the world of investments. However, it's crucial to recognize that real estate plays a role that goes far beyond the numbers. Commercial real estate holds a unique place in our lives, intertwining with our memories and emotions in ways we may not always realize.
Our Emotional Ties to Real Estate
Commercial real estate is the backdrop against which most of our lives unfold. These buildings are where we learn, store our cherished possessions, seek medical care, earn our livelihoods, enjoy meals, shop for essentials, and are entertained. They are the stages upon which our most memorable events play out.
Think about it: What stadium did you witness the greatest football game of your life? Or where did you celebrate your child's first birthday? Commercial real estate is all around us, shaping our experiences and fostering emotional attachments.
Within the realm of commercial real estate, there are a host of sectors that comprise the industry. These include office buildings, retail spaces, industrial warehouses, multifamily housing, hospitality venues, healthcare facilities, and many more. Each of these sectors plays a unique role in our lives and contributes to our emotional connection with these properties.
Navigating Life Transitions with Real Estate
Throughout our lives, commercial real estate often serves as the canvas on which we paint our memories. From the excitement of moving into a college dorm to the joy of buying a new home, these properties are not just brick-and-mortar; they are the setting for significant life milestones.
Student Housing: For many, the experience of living in college dormitories or apartments is a rite of passage. It's a time of newfound independence, lifelong friendships, and personal growth. Student housing holds emotional value, as it contributes to shaping young minds and creating lasting memories.
Self-Storage Facilities: Self-storage facilities are often where we stow away possessions that hold sentimental value. These spaces bear witness to the different chapters of our lives that require storage, including, for many, the “Four D’s” dislocation, downsizing, divorce, and death. The emotional connection to self-storage facilities lies in the role they play as keepers of our history.
Healthcare Properties: Accessible medical outpatient buildings (MOBs) and senior housing play a vital role as we age, allowing for continued independence and receiving quality care. These properties hold deep emotional significance as they facilitate the well-being and dignity of our loved ones and ourselves as we age.
Demographics Drive Demand
Demographics play a pivotal role in determining the demand for various types of commercial real estate properties. As population dynamics evolves, so do needs and preferences. This ongoing transformation is likely to continue fueling growth across these sectors in meaningful ways.
Student Housing: A steady rise in enrollment at top tier universities (Power 4) underscores the enduring demand for student housing. Even as economic conditions fluctuate, students continue to pursue higher education when they reach college age, ensuring that these leading institutions, and the housing markets surrounding them, remain the primary beneficiaries of consistent student demand. We believe a limited supply of adequate housing will likely remain a challenge for many students, evidenced by the average number of beds available decreasing by 55% from 2015 through 2025.1 Steady enrollment at most Power 4 schools, combined with international student inflows and limited new supply, has created a notable supply-demand imbalance.
Supply vs Enrollment1
Self-Storage: Our attachment to personal belongings and the nomadic nature of modern life helps ensure the enduring demand for self-storage facilities. As individuals continue to age and progress through various life events (household formation, job changes, upsizing in the case of millennials, and downsizing or selling in the case of baby boomers) the need for self-storage becomes apparent. Whether it's due to a move, downsizing, or simply decluttering, self-storage remains essential.
Top Reasons for Self-Storage Rentals2
Healthcare Properties: As the U.S. population grows year after year, it is expected that the 80+ year old population will grow at 4.7% annually.3 This aging demographic shift illustrates the growing demand for healthcare related real estate to support an increasingly elderly population. Medical outpatient buildings have grown in popularity with changing and personalized patient preferences. Many seek MOBs over inpatient hospitals whenever medical procedures are needed. Between 2018 and 2023, 59 medical procedures were approved for outpatient migration, further underscoring the need for MOBs.4
Average Growth of Population by Age Tranche3
It's easy to get caught up in the numbers and financial forecasts, however, commercial real estate is more than just a balance sheet. These spaces are the pillars behind our special memories and support us through everyday life. Whether you're a college student embarking on a new adventure, a homeowner needing a storage sanctuary, or a senior seeking quality care, these buildings are there every step of the way. Commercial real estate is ingrained in our daily lives and as we continue moving through the various stages of life, these unique sectors will be an investment opportunity worth considering.
1 RealPage Data Subscription
2 Selfstorage.com. Self-Storage Trends and Statistics to Watch for 2025. April 2025.
3 Worldbank.org – Population Estimates and Projections – 2024
4 CBRE – 2025 U.S. Healthcare Real Estate Outlook