Counselors of Real Estate provided a list of issues that they expect will affect real estate the greatest during 2021-2022. The Covid-19 pandemic created changes in multiple areas: remote work and mobility, cybersecurity, supply chain, and price instability. Below are issues that may be affected during this time:
Working remotely and mobility – Covid-19 disrupted the workplace and where employees work from. Now commercial properties may need realign the workplace adapting to more flexible and shareable space. This pandemic has created significant changes to human behavior and how people have chosen to work. Now that business is returning to business as usual, companies are facing repositioning the workplace to make it more desirable for the employee and how to best use the space.
Technology – The acceleration and adoption of technology has had great impact on real estate. At first, real estate was a little slow in adopting technology, and now the industry has put that reluctance aside. The impact comes in the areas of artificial intelligence, internet, and cybersecurity, etc.
Environmental, social and governance issues – Changes in recent years causing consumer shifts, creating new regulatory requirements, transfer of wealth, millennials change in living habits which included work and social expectations, and the ability to attract and retain top talent.
Industrial logistics – All industries such as: ports, rail lines, pipelines, manufacturing, farm and ranch, and grocery stores, etc. are a critical segment of the supply-line that affects the public. Redundancy and the ability to handle disruptions are key factors required to support a fast-moving and meet high-volume requirements in our modern-day economy.
Definition of infrastructure – Today, infrastructure appears to be redefined by many people. This is somewhat due to COVID-19, climate change, social and economic changes. The new definition appears to be expanding beyond roads, bridges, airports, and mass transit, etc.
Housing supply and affordability – The nation has faced a housing shortage since 2001. Housing groups are requesting lawmakers to expand resources, remove barriers to create more new development.
Politics – Political environment is holding back economic productivity. This means we are squandering resources while addressing problems due to partisan divide. Instead, we should be confronting and solving these common issues.
Economic growth – This is most unknown. Businesses are challenged to determine what is next and this sometimes leads to frustration. What they must do is focus on what they can control during periods of uncertainty.
Defunct businesses – There are challenges to suburban malls and empty big-box stores that are within desirable and affordable neighborhoods. This is causing re-examination of suburban communities in repositioning and transforming these areas. There have been projects started, completed and underway to help communities to reconnect.
Capital markets – Since the start COVID-19 pandemic, markets such as commercial mortgage-backed securities, and agencies such as Freddie Mac and Fannie Mae have been going through turbulent times. Mortgage companies have had to restructure credit lines and paying down debt. Going forward through 2022 performance will identify the amount of distress and losses will occur. In addition, risk management will dictate markets, property types, leverage, loan structure and pricing.