The Commercial Real Estate Landscape in 2021: Upward Trends to Expect
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The events of 2020 have changed many industries, including commercial real estate. The real estate industry, in general, is not the same as it used to be. From buyers to sellers, the dynamics and aspects are very different.
For commercial real estate (CRE), 2021 is the year of recovery. It may start slowly, but there is always a chance it will speed up this year. The economic impact of the pandemic is the main variable of most new and accepted developments for CRE.
Since it will take some time before things get back to normal, the best thing you can do is stay on top of things by absorbing new information. You can take advantage of this year to keep abreast of what is to come for the CRE sector. This article will give you an overview of the current landscape of CRE by listing the upward trends to be expected in 2021.
More investment in offices
While people will continue to work from home, opportunities will open up for investors who need commercial offices in the CRE market. While there are still vacancies in high traffic areas, business owners looking to expand will take advantage. This is because many of them looking to grow their businesses will be thinking about planning for their post-pandemic needs.
This means CRE owners should consider businesses looking for affordable office space this year. Once that is more secure, businesses will most likely hire and return their employees to the office, and they will need a place where they can do so safely. It is better to familiarize yourself with the methods of valuing commercial real estate if you want to sell your CRE in the near future.
The momentum of digital transformation will persist
Due to the pandemic, most companies have shifted their workforce to a work from home environment. This change has led to an increase in the use of technology for most sectors, including CRE.
For this reason, many CRE companies have been exposed to their lack of preparation to move to a new work environment and a new routine. In addition, the sudden change revealed gaps in the capacities of the CRE sector. This year, CRE companies will try to respond to these challenges by pushing for digital transformation.
CRE companies will focus on improving the digitization of the tenant experience and other key CRE processes. These processes include virtual tours of properties for buyers and online communication with tenants. More and more CRE companies will use and leverage tenant data and analytics to further enhance their digital transformation.
The continued rise of e-commerce
Retail stores and third-party logistics providers have benefited from the change in consumer behavior forced by the pandemic last year. Both parties will seek to resolve any issues related to order processing by increasing the number of order fulfillment centers. Industrial CRE owners will benefit because this trend is expected to continue this year.
Many online stores will need to at least rent a warehouse, especially growing ones. Those who can afford to buy one will do so once they see it optimal. There is also an expected increase in facilities that prioritize dealing with supply shortages that many companies have encountered in 2020.
As mentioned earlier, the recovery of the CRE sector will be slow. Financially, it is still a turbulent period for CRE owners, especially those who own shopping centers and office spaces. This means that these owners will remain cautious about spending and investing over the next 12 months.
Rent cuts are also expected, which will vary by region. These events will encourage CRE companies to reconsider their assessment and valuation of their assets. They will identify those who are performing better than the others and decide what steps to take to move forward without incurring significant financial losses.
These trends paint you a picture of what the CRE landscape will look like this year. Expect other trends to come to life as the year progresses and try to follow them. Observe and adjust accordingly, and you will be able to achieve your goals for this year in the CRE sector.