5 Commercial Real Estate Trends Through the End of 2020

By Don Catalano

2020’s been an interesting year for commercial real estate.  While COVID has been the top story in and of itself, its implications have made five trends emerge. We are tracking these five developments and our research indicates that they will drive the market through the end of 2020 and beyond.

 

1. Industrial’s Hot…

This trend was already extant pre-COVID but with the move towards e-commerce due to social distancing, industrial space is red hot.  Whether it’s regional distribution centers, multi-modal centers, last mile warehouses or even light industrial for small companies that support the big companies using big industrial space, America needs more industrial space and can’t build it fast enough. While projects are breaking ground across the country, expect low vacancy and light concessions to be the norm for the rest of 2020. If you find a space that works, grab it!

 

2. …And We’re Making Stuff, Too

It’s not just distribution space that is popular, either. COVID has increased demand for many products that are already made in the US, and supply chain issues (coupled with cost and speed to market concerns that predated COVID) have made companies look more seriously at onshoring some of the production that they had moved abroad.  While this trend applies specifically to pandemic related products like personal protective equipment, cleaning supplies and pharmaceuticals, it is related to a broader trend. Meta-production continues to scale up as well in the form of increased demand for data center space to continue managing and producing information and content.

 

3. It’s a Great Time to Be an Office Tenant

While the office-using economy has largely fared better than retail, with companies instituting long-term work from home programs and others reconsidering their office space altogether, it’s a great time to be looking for office space. Many landlords in many markets — especially those dominated by elevator-served high-rise space — have seen new tenant inquiries drop off, meaning that they are more likely to be amenable to working out an aggressive deal to renew your lease or to help you move into a new office.

 

4. A Gradual Return to Office

It might be tempting to look at the above trend and think that the time could also be right to completely discard your company’s fixed workplaces and go virtual. And it’s true that some workers prefer not having to go to an office for the flexibility, cost and times savings that it brings them. However, now that we’ve spent months working from home, research is showing that many employees like the office. They enjoy the professional contact, socialization, and opportunity to divide work from home. With this in mind, you can expect see more and more office workers getting back in the car (or on the train) as the COVID risk starts to decrease.

 

5. There’s Another Industrial… And It’s Pretty

Finally, the demand for industrial space isn’t just impacting the industrial world. It’s also making companies and landlords reconsider the use of the vacant anchor stores at malls and big boxes in power centers.  After all, many retail buildings are just pretty warehouses once you strip them out.  With this in mind, expect to see unused retail space helping to solve the last-mile distribution problem for many industrial users, and don’t be surprised if you see more small stores with big warehouses attached.

Article from: https://www.reoptimizer.com/real-estate-optimization-blog/commercial-real-estate-trends-through-end-of-2020

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