Commercial real estate market trends of 2021

The Covid-19 pandemic had an impact on all aspects of our lives, including real estate. 2020 brought a lot of challenges to the commercial real estate market. Today, almost all restrictions associated with the spread of coronavirus infection are gradually being lifted and the commercial real estate industry has begun to recover from the shock caused by the coronavirus. The article shows some of the commercial real estate trends we can expect in 2021.

As Covid-19 was gaining momentum, companies began to transfer their employees to remote work, since that was the only way to protect employees from possible infection. Previously, some companies were skeptical about remote working as some jobs were considered impossible to do from a distance. However, Covid-19 destroyed all these myths.

Now, many organizations have realized that working from home does not significantly reduce the productivity of their employees and in ways, is money-saving. Therefore, it is possible to adopt and practice a work culture of permanent remote work. Saving on rent seems very tempting for companies, but it is hitting the commercial real estate market.

Covid-19 has become a prerequisite for a change in approaches to investing in commercial real estate. Flexible offices are replacing traditional ones, and the demand for new warehouse spaces is increasing.

Still Covid-19

Of course, the problem of Covid-19 is still relevant. Any predictions that do not take this factor into account are impossible. At the moment, experts are making contradictory forecasts for the overall economic picture of this year. Some believe that we are already in our recovery period, while others believe that the recent lifting of restrictions will be the beginning of a real recovery.

Because of a large number of employees working remotely due to Covid-19, many are questioning the future of office buildings and long-term commercial leases. These fears are not unfounded, as large companies have announced that employees can work from home all the time. However, many people expect office buildings to reopen. Since people are actively becoming vaccinated, the virus rate is expected to decline, and the economy to return to its normal state.

Nevertheless, the situation in the real estate market remains not stable. Therefore, potential tenants, landlords, and investors need to do extensive research before making deals.

Increase in warehouse demand

Warehouse demand has skyrocketed as retailers strive to keep up with the rise of e-commerce. Especially during Lockdown periods when retailers had to close, many companies took their business online. Real estate investors should expect the value of warehouses and other industrial property to rise significantly this year. Owners can benefit not only from higher property values but also from higher average rents for these properties.

Population decline in large cities will continue

Big and densely populated cities will continue to decrease in population. Work from home tendencies during the quarantine has further accelerated the churn from these large metropolitan areas. People are looking for places that offer better lifestyles and lower the cost of living. After the pandemic, many people rethought their lives and realized that they did not like the bustle of the city. What’s more, considering family life, career paths, and or future plans, many professionals were forced to reconsider their current lifestyles. 

Abandonment of offices

The pandemic has forced all companies to change the way they work, and many have concluded that having employees working from home is beneficial. Many organizations realized that they would never return their teams to offices; others moved to the hybrid work models where employees divide their time between the office and home. These changes in nearly all industries will reduce the need for large offices, creating the basis for smaller office sizes.

Class A office space

The demand for high-quality office space will remain. Nowadays, special attention is paid to multifunctional workplaces. A modern business center should include the maximum number of establishments and services required by tenants. For them, it is crucial that the business center is not a single building surrounded by other administrative buildings. Tenants want to see a presentable business center next to the main transport lines, and nearby there should be cafes, restaurants, shops, postal and bank branches, shopping centers, etc.

Architecture and design

Modern companies want to work in a beautiful place and are willing to pay for it. Monolithic buildings can become lacking in impression, while unconventional properties positively impact the employees.

Real estate companies are also interested in new architectural solutions, ventilated facades, and sustainable materials. And this tendency seems to continue also for the next several years, as all these factors are crucial for tenants.

Flexible office popularity

There is a growth in the popularity of flexible offices, which have already become a popular product among corporate tenants. Flexible offices, which have been rapidly developing over the past few years, are gradually becoming a really serious and logical option for accommodating large corporate tenants, for example, telecommunication companies, IT organizations, etc.

In the last few years, the share of co-working spaces on the market has grown. Among the essential requirements of such properties are renovated buildings, the availability of adaptive layouts, and a sufficient number of parking spaces. Due to the high payback period, the format of office real estate remains relevant among investors.

Despite the crisis and the lockdowns, the commercial real estate market began to actively recover. This, in particular, was facilitated by the willingness to adapt to current business needs and requests quickly. So, if you are looking for a suitable workplace, which meets post-pandemic requirements, My Perfect Workplace will help you find the best option.