Broker/Owner of Commercial Professionals in Las Vegas for over 25 years focusing on off market investments. Prof Speaker and Success Expert.
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The pandemic has negatively affected all classes of commercial real estate (CRE), however, it has also generated innovative possibilities for the CRE market this year including affordable rental prices, efficient online communication and sending in forms and payments with just a click of a button.
Commercial real estate will gradually begin to recover from the pandemic’s impact this year. This recovery may have its difficulties and setbacks, just like in 2020. However, this can also mean that opportunities are waiting for business owners and investors. Knowing the latest trends and predictions can help you make smart decisions in the CRE market this year. Here are a few emerging trends and predictions you should be aware of in 2021.
2021 Commercial Real Estate Trends
1. John D’Angelo, Deloitte Consulting’s U.S. Real Estate Leader, recently stated that the Covid-19 pandemic is increasingly speeding up commercial real estate’s use of technology. CRE corporations worldwide are also researching to understand the following:
• Evolving behavioral trends
• How to establish secure building spaces
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• Different ways to increase efficiency
• How to recognize challenges and vulnerabilities at the asset and portfolio level
CRE corporations should familiarize themselves with the results of this research as these are important trends that will likely impact the CRE market as a whole. Those who understand these trends will be able to provide their clients a better experience with access to this knowledge and, therefore, result in steady sales.
2. Because of the pandemic, lockdowns have led more companies to have their employees working from home. While it may seem like there would be no use for office space in 2021, there are actually several opportunities in the CRE market for commercial offices that were not there before. Vacancies in high-traffic areas make this the perfect time for commercial owners who are looking to expand.
While many businesses are still waiting to bring their employees back to the office, there are undoubtedly several good reasons for having an office in a post-Covid environment. In an office, employees have more space to work collaboratively, increasing cooperation and efficiency. CRE owners and investors should acknowledge the fact that even during the pandemic, there are still business owners out there looking for affordable office space and keep this in mind as they make their investment decisions this year.
3. E-commerce, an already growing sector prior to 2020, boomed during the pandemic. In response, retail stores and third-party logistics businesses are not only growing or optimizing their fulfillment center footprints, but many of them are also switching from a just-in-time inventory model to a just-in-case approach as they aim to prevent the shortages of goods encountered throughout 2020. As this trend continues, many online shops nationwide will need to lease a warehouse for their growing businesses. This will provide a steady increase in leasing opportunities in the CRE market that owners and investors should take advantage of.
2021 Commercial Real Estate Predictions
Due to ongoing pandemic threats, predictions for the future of the CRE market are still unclear, but with the rollout of vaccinations and another stimulus on the way, there are positive signs that the recovery of the market as a whole is well underway.
1. The recent passage of the American Rescue Plan will play a significant role in the sustainability of small businesses as they can potentially use their stimulus to expand into other commercial areas. CRE investors and owners should keep a close eye on small businesses and be prepared to seize opportunities.
2. Major corporations with millions of people working from home will also likely have a major impact on the office space market, depending significantly on what kind of new standard arises as 2021 moves forward.
Investors should choose well-directed office REITs for longer-term growth or, if you know more about the industry, look for a great deal on office space leasing. Remember, several factors like vaccination rates and normal travel restoration could lead to a possible revival starting in late 2021.
In the meantime, some other sectors, specifically the industrial sectors, have been doing well, particularly in warehouse operations, life sciences and network infrastructures. Wait for all those investments to increase in 2021. One of these could present possibilities for smaller investment deals.
Final Takeaway
As a result of the pandemic, there is still a tremendous amount of uncertainty regarding the commercial real estate market. However, despite the pandemic, numerous investors continued to be involved in the market, even though problems related to site visits, assessments and contract signing often delayed the process. There are stable CRE sectors that have continued to perform well that investors should look forward to investing in. These include e-commerce warehouses, self-storage facilities, some grocery stores and medical or retail spaces. Even after the pandemic, these spaces will continue to flourish.
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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