CRE Post-COVID, Opportunities & More
The year 2020 was unlike any other, primarily because of the COVID-19 pandemic. The virus is likely to affect commercial real estate (CRE) throughout 2021 and beyond.
Some asset classes are seeing more negative impacts. “Continuing uncertainty about the pandemic froze transaction deal volume in 2020 and put significant pressure on property types like hotel and retail. Other property types’ performance metrics are holding relatively steady, there is often a lag when economic distress manifests in rent and occupancy declines. Let’s take a look at the trends and opportunities you may want to keep in mind for 2021.
Macro Consumer Trends to Watch
As with any economic downturn, investment opportunities arise.
“High-quality multifamily assets remain viable, and affordable housing performance metrics are rock-solid—with vacancies barely budging and national rents continuing to rise every quarter. The boost in e-commerce activity appears to be benefiting logistics and life science industrial properties,” Calanog said.
Beyond specific asset classes, we believe these trends may also pick up steam in 2021:
- Properties with new purposes: Once COVID-19 hit, our homes became our offices, schools and gyms. Why not rethink the way other properties are used? While some traditional malls, for example, have been converted to warehouses, there are many more that can be repurposed. Traditional malls can also become affordable and workforce housing. Likewise, hotels can serve as extended-stay lodging or quiet office space for people working remotely throughout the pandemic; in the future, they could be repurposed as affordable housing.
- Sustainability makes sense economically: The country is quickly moving toward alternative energy. One study published in Energy & Environmental Science predicts that 80 percent to 85 percent of the US will run on alternative energy by 2030. The cost of going green is also dropping. Lawrence Berkeley National Laboratory’s 2020 Utility-Scale Solar Data Update showed that the median installed cost of projects in 2019 was down 20 percent from 2018 and down by more than 70 percent from 2010.
- Technology on the rise: Overall, the commercial real estate industry has been slow to adopt digital solutions. But simplifying property management can reduce staff time and costs, provide more payment alternatives, and decrease payment times—all of which can help your bottom line. It’s time for the industry to embrace and integrate technology with digital treasury solutions, rent payments and vendor invoicing.
Tackling the Upcoming Year
The COVID-19 pandemic highlighted the affordable housing crisis and accelerated the growth of e-commerce, trends that will carry over into 2021. As remote work continues, you should focus on keeping your resiliency protocols and internal controls high while looking toward future opportunities.
Originally published by Commercial Observer on January 5, 2021.