With the rise of the millennial generation, there has been a decided shift in priorities regarding living spaces, work areas and recreation. This shift to a centralized urban area has had a profound effect on employers and will also have a decided impact on commercial mortgages for urbanized properties.

As a new generation of employees enter and dominate the work force, their values will begin to shape the changing landscape. By bucking the suburban culture in favor of a highly centralized living space that incorporates work, home and play, this new generation has also created a ripple in the real estate industry and commercial mortgages.

But how will this actually effect the real estate environment for investors and developers? The safe assumption is that the population will gradually be shifting back to urban centers and away from neighborhoods. For major metropolitan areas, this will mean an even more dense central area.

The effect that this will have on commercial real estate has the potential to be quite profound. Strip malls and commercial areas in outlying areas will decrease in value, as property values of the surrounding area decline in an attempt to stay appealing. With declining retail values, there will be tenants that will be unable to keep up with a rising cost while facing a declining income stream. Commercial mortgages will then turn from a necessary expense of expansion to a liability, and could ultimately result in defaults.

While this changing environment might provide low end opportunities for new investors, it also has the potential of being a trap. Just because a property has a low floor does not mean that it has a high ceiling. This will require a great deal of research on behalf of the borrower in order to properly assess whether or not there is profit potential in a property. It will also differ greatly depending on geographic area. What is a good investment in Austin, Texas, might be a disaster in Portland, Oregon.

There is also a great deal of potential for urban development in this chaotic change, however, as commercial mortgages for multi-family housing units will most likely become even higher in demand. With more single individuals seeking living space in areas that are close to urban areas and their employment, apartment buildings and other living spaces are sure to increase in demand.

How will this demographic shift affect the development of the suburbs and the disbursement of commercial mortgages?

One thing is for sure. If the suburban landscape is going to survive this, things will have to change. The suburbs are going to have to develop an appeal to millennials that rivals that of urban centers. This provides a great deal of opportunity for the creative and savvy investor. Being able to acquire commercial mortgages on lower valued properties does have the potential of turning a great deal of profit if it is done correctly. Small businesses might be slow to respond to this, and might not even be able to transport their services and good to a more urban environment. But cultivating an urban feel in a suburban setting, a clever investor stands to turn an excellent profit.


Dennis Dahlberg
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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