What’s Driving the Commercial Real Estate Market In 2021?
The commercial real estate market has long been affected by the ups and downs of the economy as well as worldwide and local events. As we finish up the first half of 2021, let’s see how things look and what commercial real estate trends we can expect to see the rest of the year.
Areas of Growth in the Commercial Real Estate Market
There are 2 specific areas of growth that have emerged in the commercial real estate market and, they aren’t likely to go away anytime soon.
Medical Retail Space – Even before the pandemic, this part of the market had seen some increases as crowded hospitals moved some operations out of the main campus to free up space. This trend has continued throughout the pandemic with an increase in the use of medical services. Increased patient accessibility, fewer regulations, and lower overhead costs are just a few of the reasons for an uptick in medical retail space utilization.
Industrial Space – Ecommerce had already begun to be a part of everyday life prior to the arrival of COVID-19. When the pandemic hit, however, e-commerce sales skyrocketed. And, even with the effects of the coronavirus decreasing across the country, it continues to be a mainstay in our economy. With the increase in sales comes a need for more industrial space like warehouses and fulfillment centers. As Americans become even more accustomed to being able to shop from the comfort of home, it doesn’t look like this trend will be going away very quickly.
Factors Negatively Impacting the Commercial Real Estate Market
Not surprisingly, real estate professionals across the country touted COVID-19 as being the biggest factor affecting the commercial real estate market in 2020. And, they reported that they expect these 5 factors to continue to affect real estate throughout much of 2021:
Unemployment – With many individuals still out of work throughout the US, this affects commercial real estate occupancy.
Business Closures – Some companies have gone out of business altogether, thanks to being forced to close during the pandemic. Others are still open but facing economic challenges due to decreased revenue.
Declining Oil and Gas Industry – Lower production on American turf means fewer jobs, increasing prices, and other impacts on business.
Decreasing Property Values
More Employees Working Remotely – Even though many businesses have reopened, there is still a higher percentage of employees working from home than there was prior to the pandemic. Whether they eventually return to the office is specific to each company and the state in which they operate. In the meantime, however, some areas are seeing a reduced need for commercial office space.
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