The commercial real estate industry, not unlike the residential sector, is subject to seasonal changes and trends. Investors are keeping an eye on these trends because they can affect local markets for short periods, and they need to ensure they choose the right moment to invest. The ever-changing trends and their influence impact investors' plans and strategies and allow them to edge out their competitors.
2020 was the best of times for some investors, but it also was the worst for those who put their money into businesses that closed because of the restrictions. Last year was a tale of two cities for industrial real estate because office, hospitality, and retail buildings were transformed into ghost properties overnight. But healthcare, industrial, and life-science real estate were resilient due to its tenant base that was part of the essential businesses. Commercial real estate specialists expect the contraction and growth patterns the industry experienced in 2020 to continue in 2021. However, some sectors will probably rebound faster as fewer restrictions are in place.
2020 was marked by robust development of distribution and warehouse facilities because retail companies had to meet the sudden growth and popularity of e-commerce. Hospitality, retail, and office development faced a standstill because everyone stayed at home. Investors in these sectors need to be creative to come up with strategies that attract clients.
To fully understand the upcoming commercial real estate industry trends, review the list of tendencies provided in this article.
However, before let's check what investors should expect from the present commercial real estate market
The real estate sector has been a reliable and stable wealth-building tool for many entrepreneurs looking to diversify their portfolios, and it's expected to stay this way even in the current context. However, some entrepreneurs are concerned about the effects 2020 will have on the market because it undeniably hit the economy on multiple levels. The global soaring unemployment rates negatively influence household income, and real estate experts predict that they will also change the way business is done in the commercial real estate sector.
The present situation forces space managers to adapt quickly and even change their buildings' purpose if they want to see a change. Businesses are eager to bounce back, which means that commercial spaces will soon see tenants, and investors will have fewer unoccupied buildings. Some corporations are ready to adapt and implement new policies to rebound successfully. Entrepreneurs willing to make the most out of this situation are reading educational articles to learn what types of commercial spaces are more likely to appeal to the public in the following months. They want to provide their public with safe and secure venues where they can work or engage in their favourite activities. Some commercial spaces managers may find out that making changes to the buildings allows them to enhance standards and create an attractive environment for clients.
Predictions for 2021
Surging demand for industrial spaces
Everyone has noticed the growth in e-commerce demand lately. From toilet paper to food supplies and clothing articles, almost all products are ordered online. Higher demand for products sold online means a higher need for industrial space like distribution centres, warehouses, and other similar buildings that can support the retail process. Therefore, entrepreneurs looking for commercial real estate opportunities should look into industrial facilities that can be used as industrial warehouses.
Increased production and manufacturing
Throughout the last year, most countries registered an increased interest in national-made goods, especially those that boost comfort and well-being. The concerns about the speed and ease of bringing international products are still burning in all sectors. Therefore the local manufacturing and production businesses are expected to perform better than during the last years. This also implies that they need larger storage spaces to house the necessary supplies for the production process and the end products before shipping them to buyers.
Increased retail opportunities
Even if most retail spaces were closed during 2020, malls and larger buildings stayed open as they allowed people to maintain social distancing. In fact, large retail spaces have become more popular during the last months, and more businesses are expected to open land-based venues in retail centres.
Resorts will also reopen in 2021 to welcome tourists eager to leave their homes for the first vacation in months. Commercial real estate experts expect companies from domains like gambling, fashion, fitness, healthcare, and beauty to collaborate with resorts to provide tourists with a complete set of services. Businesses like casinos are expected to add new themed slots to their collection of games to appeal to a broader public. Even if during 2020, most casino venues were closed even in locations like Macau that used to be travel destinations for gamblers worldwide, 2021 will witness these commercial ventures reopening.
Office space openings
During the last months, some companies encouraged their employees to work from home, but the new year brings new working methods, and most corporations will welcome their employees back to the office in the following months. Most of them will welcome them back in new spaces because it was easier for them to relocate when there were no workers disturbed by such an extensive process. Everyone knows how challenging is to relocate an entire business when the employees come daily to the office. Still, organisations can take the needed time to plan and operate changes when there's no one around. This is the perfect moment for companies to find a new office space with many places available at affordable rates.
Final thoughts on commercial real estate trends
Commercial real estate is expected to experience several changes in the following months. Still, change usually means progress, and investors should take advantage of this chance to explore the business opportunities the industry offers. Entrepreneurs should focus their attention on easily accessible properties located in popular areas. A few markets are expected to stand out in 2021 due to financial stability, and most of them are located in Scandinavia.