2020 will forever be marked into everyone’s memory as the year a microorganism has brought the entire world to its knees. The economic impact of COVID-19 has adversely affected nearly every industry, from retail down to tourism.
The real estate sector, particularly commercial real estate, is no exception. Office spaces became empty after state officials issued shelter-from-home orders to mitigate the virus’s spread. Remote working caught like wildfire and workstations began to sprout in almost every home to keep the gears of business running.
However, 2021 brings the promise of recovery in commercial real estate, now that vaccines are being rolled out and everyone is slowly adapting to the new normal. Challenges still abound as changes brought about by the pandemic will continue to reshape the industry.
Trends in the new normal
Here are some of the trends that are expected for commercial real estate in the new normal.
- Commercial real estate that thrives on the presence of customers will continue to feel the negative impact of the pandemic. These include hotels, resorts, gyms, and restaurants.
- As brick-and-mortar stores were forced to close their doors in compliance with state-imposed safety protocols, e-commerce experienced a surge. It will continue to flourish this year as many retail businesses develop online counterparts to their physical stores. It must be noted, though, that while the demand for traditional retail space has gone down, the need for warehousing and industrial facilities has increased.
- Some areas of commercial real estate remain stable, such as grocery stores, warehouse operations, self-storage facilities, medical spaces, network infrastructures, data centers, and life sciences.
- Flexibility is the new black among workspaces as experts see a mix of employees, many of whom will be returning to the office while others will want to keep their work-from-home or remote working setup. Thus, offices need to come up with a hybrid model to sustain operations and productivity. This will be crucial to “future-proofing” their business.
- Commercial property owners need to adjust to the new requirements for flex spaces. Among these adjustments are the creation of coworking spaces, private offices, and short-term leases. The good news is that landlords of these commercial/business spaces realize the specific needs of each business – thus, the flexible strategies buoyed by technology.
- Owners of rental properties were among those who took the biggest hit at the onset of the pandemic last year, especially with the surge in job losses among tenants and the rise of the remote work setup that led to people moving from mega-cities like New York City and Los Angeles to either the suburbs or to the more affordable yet dynamic Sun Belt cities like Phoenix, Atlanta, and Dallas.
- Experts are mixed in their forecasts for property rentals this year as some predict that this trend will continue. Others, meanwhile, see the scarcity in the housing inventory, delays in new construction, and steep home values as the factors that will prompt people to look toward rentals as more affordable options.
Despite the uncertainties commercial real estate is facing in some sectors, other sectors continue to perform well. These flourishing spaces are worth looking into by new investors. As for existing commercial property owners, flexibility and keeping up with industry developments are key requirements for surviving and thriving during these challenging times.
Interested in investing in commercial real estate in Ogden, Utah? Contact our expert team at Destination Properties to learn about the most profitable options here and for great tips on choosing the right commercial real estate that will suit your requirements. Call us at 801.745.2009 or send an email to info(at)destinationproperties(dotted)com.