Select Page

Effects of the covid-19 pandemic to commercial estates and the global economy have made 2020 a memorable year. For instance, commercial real estate has been forced to shift to digital operations and close down physical facilities because of extensive lockdowns. Thus, it is uncertain about when the economy will fully recover. Here are the most recent trends in commercial real estate.

Change in Retail Properties

Retail space is one of the commercial estate assets categories that are likely to undergo many changes. For instance, Covid-19 has changed people’s shopping behavior. Retailers have responded to the changes by carefully considering their purchases and only buying what is necessary. Therefore, there are reduced chances of impulse buying.

Low-Interest Rates

One of the most likely trends in commercial estate is low-interest rates. The federal reserve has reduced interest rates and will hopefully maintain the rates at that level until around 2023. As a result, interest rates are currently favorable for borrowers who require access to capital markets. The low-interest rates trend is likely to help boost the economy because it encourages business people to borrow since they do not have to repay high interests.

Growth of Multifamily

Housing is a basic need; hence people prefer paying rent before doing anything else, especially during economic distress. Multifamily housing is a kind of housing with minimal barriers to entry. Therefore, it is anticipated to grow continually. People are likely to abandon urban areas due to lower rents and bigger spaces available in the suburbs. Affordable housing is likely to remain a concern due to the loss of jobs and stagnant wages that reduce house affordability for most people.

High Demand for Industrial Property Due to Digitalization

An increase in e-commerce purchases will bring high interest throughout the industrial real estate. Covid-19 has accelerated technology use in commercial real estate. Few weeks following the pandemic outbreak, most workers in commercial real estate shifted to remote working, property tours changed into virtual, and tenant communication shifted to online channels. The observed CRE trends are likely to continue because people need more technology to conduct their daily operations. Subsequently, commercial real estate companies increase their cloud-based productivity tools and collaboration to increase flexibility while lowering technology expenses. Even after the economy recovers, there are high chances of retaining digital transactions because they are easier and time-saving.