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There’s been a great deal of uncertainty about the commercial real estate industry over the last several months in the wake of the Covid-19 pandemic. Florida’s commercial real estate occupancy is almost at a 10-year high in many areas, but with the pandemic still in full swing, is now a good time to invest?
The effects of the pandemic have been far-reaching in all industries, but it seems clear that Covid-19 has fundamentally changed the way real estate business is conducted. The demand for space has been impacted by social distancing, shutdowns, quarantines, layoffs and remote work. As a result, the face of CRE has changed dramatically.
At the start of the pandemic, there was a consensus that everyone working at home would want to continue doing so. But as the months wore on, the basic human need for social interaction made itself felt, and many workers are now anxious to return to the workplace in some capacity.
But how much in demand is office space these days, with so many people working remotely? The answer is that office space is still in demand, but with different types of amenities. Companies’ needs have evolved. Whereas in pre-Covid-19 days, some businesses were looking for spaces with gyms, lounge areas and meeting rooms, the demand now is for indoor air quality, touchless technologies and appropriate distancing between office cubicles. Some businesses are going for a blended remote and in-office model. This allows the physical office space to continue playing a role for in-person gatherings where ideas are shared. But overall, prospective tenants are primarily on the lookout for a healthy and safe building environment and a property owner that cares about their tenants’ well-being.
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There are sectors of commercial real estate that show sustained activity during the pandemic. These include warehouses for e-commerce, self-storage facilities, and certain retail spaces for grocery stores and pharmacies. Consequently, many investors have remained active in the market throughout the pandemic, even though issues around site visits, appraisals and document signing can sometimes slow the process down.
And opportunists are always keeping a close eye out for distressed properties and takeovers.
I expect to see continued volatility as our economy evolves. I’m sure that remote working will continue and the demand for new types of office space will remain focused on space that reflects social distancing and worker safety. I would also suggest that older office space that is ill-equipped to provide the right health and safety amenities may become obsolete.
The commercial real estate industry as a whole has most certainly risen to the challenge, creating a variety of positive changes to the marketing experience as a result of the pandemic. With continued observation and insight, we can meet the dynamic needs of the present while looking forward to the possibilities and pitfalls of multiple potential futures.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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