None of us could have predicted the events of 2020. Nevertheless, investors need to turn their attention towards commercial real estate trends that are emerging due to 2020. The pandemic forced many industries to pivot their operations to adapt to the uncertain times. The commercial real estate business has been no exception. It’s hard to tell exactly what’s in store for the commercial real estate market, but if the events of the past year or so have taught us anything, it’s to prepare for anything and everything.
If you’re considering investing in or leasing commercial real estate space, you haven’t missed your chance. In fact, you could be poised to get some amazing deals in light of the market downturn. Future investment success comes down to knowing which sector of the real estate market to put your money in. Read on to find some of our takeaways from the impact of 2020 on the commercial real estate industry and what we’re looking at for the year ahead and beyond.
1. Malls are on the downturn
The trend towards the decline of malls isn’t anything new. Even so, the pandemic contributed greatly to the demise of the retail shopping center. CRE landlords have moved towards repurposing large retail shopping centers into other more profitable spaces, like warehouses. Regardless, we predict that brick and mortar stores will remain resilient and strategize in order to stay in business. Shifts in inventory models and using warehouses to meet the e-commerce demand presents new opportunities for those looking to purchase, rent, and/or lease out their CRE this year.
2. Grocery stores are staying strong in real estate trends
While the popularity of malls likely won’t ever return to its former state, grocery stores have maintained their demand through the pandemic. People need food to survive, and grocery stores being deemed essential businesses speaks volumes about their resilience in the market. Despite the popularity of grocery delivery services that reached its peak last year, these services still rely on couriers to pick up and transport the groceries to the customer’s home. Their ability to pivot gave us a great example of how technology can simply improve a commercial business instead of making the brick and mortar locations obsolete.
3. Office spaces aren’t going anywhere — for the most part
While most 9-5’ers had to work remotely last year — and still may be doing so — the reopening of office buildings will bring employees back to work in droves. To be sure, remote work won’t completely disappear from many companies’ approaches. However, the benefits of working in person outweigh working from home for many. Right now, many employees are burnt out, lacking motivation, and feeling frustrated with their current situation. Going into the office provides employees with a sense of routine, a collaborative community, and the face-to-face interaction that the majority of people have been longing for. With the prevailing urge to return to a sense of normalcy, going back to business as normal will more than likely prove to attract many employees.
4. Properties are finding new purposes
Creative use of CRE spaces became a priority during the pandemic. To make ends meet, properties have found new ways to serve people when their original purposes failed. For example, vacant retail spaces and malls have been converted to affordable housing and apartment complexes. Similarly, restaurants have converted dining rooms into takeout and delivery assembly areas. E-commerce warehouses, medical buildings, and storage facilities have held strong in the face of Covid-19. The pandemic has taught CRE property investors to think creatively about their spaces and remain resilient in the face of uncertainties.
5. CRE holders are increasingly embracing technology
The pandemic had an incredible impact on the digitization of business. It pushed them to create and work with online platforms to take their operations online. Landlords have had to adopt online systems to accept rent payments remotely. Restaurants have had to set up takeout and delivery options on their websites. Those trying times forced many to get a little better acquainted with technology. This is probably for the best, and only accelerated a shift that’s been slowly taking place over the past couple of decades or so. Prospective CRE tenants and landlords should stay on top of technological trends and familiarize themselves with online tools so they don’t get left behind.
Takeaway with commercial real estate trends
The best thing that CRE investors and owners can do in these relatively uncertain times is familiarize themselves with commercial real estate trends and brace for any and all moves. We’ve observed the impact of the pandemic on the real estate market. Now, it’s time to look to the future and make smart decisions. There’s still much research to be done and a plethora of possibilities that lie before us. All in all, commercial real estate remains a solid investment. As the market picks back up, both investors and tenants can expect to see growth in the future.
