What The Future of Commercial Real Estate Will Look Like
We all know that change is all around us now thanks to the pandemic and commercial real estate is no exception. Today let’s look at how it is changing as a result. I guess we have to start with the most challenging sector, retail. People are funny, they get into habits which become ingrained behaviors. When you keep people inside for months they will figure out how to shop online, whether they did so before or not. Now when told that they can venture out into stores again will they? I think the answer is not nearly as much as they did in the past. So less retail space is needed and there will be less retailers in general.
Everyone must adopt new safety measures and all of those cost money, creating new expenses. That coupled with less traffic makes it very difficult for retailers to survive today. Look to see many half full shopping centers in the near future. The office sector is better off but also going in the same direction of contraction. Companies were forced to stay inside for months and during that process figured out how to have employees work virtually. It ends up being a win win deal as the employees enjoy it and the companies can save money on real estate. So they will need much less office space going forward. We won’t even talk about the challenges of high rise office buildings and their elevators, that is a separate blog entirely!
That brings us to multifamily. Here is where we will see the most changes, now that hygiene is the new way of the world. Everything from amenities, ventilation, elevator safety measures, increased cleaning, etc. These are is a good things but they will be very expensive to implement. I also see micro units growing in popularity, for everything from hotels to apartments. Finally that takes us to the shining star of commercial real estate, the industrial sector. The biggest change we will see in the future is pricing eclipsing office and some retail, which is something never seen before. The demand for industrial will only grow along with the increasing use and popularity of ecommerce. The recession will force more people to ecommerce because it is the least expensive way to buy things and saves time as well.
As always thank you for reading, stay safe and have a great day.
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