The coronavirus pandemic has sent thousands of office workers home and has left the future of commercial real estate up in the air. Commercial real estate applies to real estate that is used for business purposes, including office spaces, warehouses, factories and retail. As commercial agents are looking forward to the future, they are paying attention to the current trends. There are several real estate trends affecting the market.
The Industrial Market is Seeing Growth
Even though office space is less in demand at the moment, one area of commercial real estate that is seeing growth is the industrial market. Industrial space includes warehouses and distribution centers. As people are shopping online more than ever, companies need warehouses to ship the products from. Urban distribution spaces are the most valuable but also the most expensive to build. The demand for pre-existing space is high.
There is Less Demand for Office Space
Unsurprisingly, with the growth of remote work over the past year, demand for office space has decreased. Several large companies have made the decision to go fully remote in the future while others see this as an option for at least another year. If companies decide that their employees work just as effectively from home and they can save money on real estate costs, they might determine that they too will remain remote.
Retail Occupancy is Uncertain
The retail sector includes small stores, shopping malls, restaurants and grocery stores. Some of these businesses have been impacted harder than others by the pandemic. Grocery stores, pharmacies and restaurants with good delivery and takeout business are doing well and will most likely last beyond the current crisis. Other small businesses are struggling and vacancy rates are already going up. Shopping malls have not been doing well over the past few years and the big increase in online shopping this year is not helping. Expect to see a lot of retail vacancies in the future.
Although this is not an easy time for commercial real estate, there is hope for the future. Eventually, businesses will begin to bring their employees back to the office. They may need to find new spaces to meet their changing needs. The industrial market has been the surprise star of the year. Retail may take a while to rebound and developers will need to think beyond the shopping mall model, but as long as people like to shop and eat, there will be businesses to serve them.