With everything that’s been going on in our lives in 2020, it can be helpful to take a breath, step back, and try to get an idea of what this will all mean to us in commercial real estate in moving forward. No one can have the ultimate crystal ball when predicting the future, but at the same time we can all look to the shifts that we’ve seen going on, to better help us in
building our map.
For example, with all of the jobs that have been getting shipped overseas, who would have predicted a strong resurgence in industrial properties once again nationwide, as this new phenomenon called e-commerce has caused a dramatic shift in the demand for warehouse properties. In addition, under certain conditions, the demand by e-commerce for what is termed “last mile delivery” has allowed for the repurposing of some older industrial buildings, as well as some vacant retail buildings, too.
Then we have the office sector, which is right now dealing with the ramifications from social distancing within the workplace, as well as dealing with people having now had the experience of working from home, as the COVID-19 quarantines within recent months have made this necessary. In addition, with people now continuing to order a higher percentage of their retail products online every year, what will this now mean for the future demand for retail space?
So in looking towards the future, it seems that office and retail properties could be more challenging, while industrial and multi-family properties could be the better bet. Because with apartment buildings, for example, people will always still need a place to live, even though they may no longer be working inside of a commercial building.
With the forecasting for e-commerce telling us that it is expected to continue on expanding, the ideally suited industrial and “last mile delivery” buildings should continue to experience good demand.
However, with office and traditional retail properties, it may become more important than ever to have solid, in-demand locations for these, as people will ideally want to rent the best, and if office demand isn’t strong, the older and less-desirably located buildings may need to have reduced asking rates in order to get leased.
In summing all of this all up, there is no one-size-fits-all solution for all commercial real estate investors in every location. What’s important is for you to do your homework and gauge the trends within the local market where you own your property, consult with an expert, and then make your best moves accordingly. Then when you do this, you’ll stand the greatest chance of being thrilled with your commercial real estate decisions, and you’ll make the best decisions for your future, too.
