The Commercial Real Estate Landscape In 2021: Rising Trends To Expect

The events of 2020 changed many industries, including commercial real estate. The real estate sector, in general, isn’t the same as it was. From the buyers to the sellers, the dynamics and aspects are way different.

For commercial real estate (CRE), 2021 is the year for recovery. It may start slow, but there’s always a chance for it to accelerate some time this year. The pandemic’s economic impact is the primary variable for most developments, both new and retained, for CRE.

Since it’ll take a while before things go back to normal, the best thing to do is to stay on top of things by absorbing new information. You can use this year to keep yourself updated with what’s coming for the CRE sector. This article will give you a picture of CRE’s current landscape by listing the rising trends to expect in 2021.

More office space investments

Although people will continue to work from home, there will be opportunities opening up for investors who need commercial offices in the CRE market. While there are still vacancies in high-traffic areas, commercial owners looking to expand will capitalize on them. It’s 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 that businesses are looking for affordable office spaces this year. Once it’s safer, companies will most likely hire and have their employees return to the office, and they’ll need an area where they can do it safely. Better brush up on commercial real estate valuation methods if you want to sell your CRE’s soon.

The drive to digital transformation will persist

Due to the pandemic, most companies transferred their workforce to a work-from-home environment. That shift led to the increase of technology usage for most sectors, which included CRE.

Because of this, many CRE companies were exposed to their lack of readiness for shifting to a new work environment and routine. In addition, the sudden shift exposed shortcomings in the CRE sector’s capabilities. This year, CRE companies will be trying to address these issues by pushing for digital transformation.

CRE companies will be focusing on improving the digitization of tenant experience and other key CRE processes. The said processes include virtual property tours for buyers and online tenant communication. More CRE companies will utilize 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 benefitted from the shift of consumer behavior forced by the pandemic last year. Both parties will be looking to address all fulfillment-related issues by increasing their number of fulfillment centers. Industrial CRE owners will benefit from this as this trend is expected to go on this year.

Many online shops will need to at least lease a warehouse, especially those growing ones. Those who can afford to buy one will do once they see it optimal. There’s also an expected increase in facilities that prioritize dealing with supply shortages that many businesses encountered in 2020.

Financial cautiousness

As aforementioned, the recovery of the CRE sector will be slow. Financially, it’s still a turbulent time for CRE owners, especially those who own shopping centers and office spaces. It means those owners will stay cautious about spending and investing in the next 12 months.

There are also expected rent declines which will vary depending on the region. These occurrences will prompt CRE companies to reconsider their assessment and valuation of their assets. They’ll be identifying which ones are performing better than others and decide what course of action to take to move forward without suffering significant financial losses.

Closing thoughts

These trends paint you a picture of how the CRE landscape will look like this year. Expect other trends to come to life as the year progresses and try to keep track of them. Observe and adjust accordingly, and you’ll be able to achieve your goals for this year in the CRE sector.

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