Commercial Real Estate Trends to Watch
Commercial real estate industries are expected to continue improving in the coming year as the economy recovers from the Covid-19 outbreak. The future holds both risk and reward potential. Here are the top advancements to keep an eye on, listed according to Dr. Jordan Sudberg.
Skilled nursing care for the elderly
Senior homes and skilled nursing facilities will continue to rebound in 2022 due to increased vaccination rates among those 65 and older. There won’t be a complete recovery until 2023. The Baby Boomer demographic surge will fuel long-term demand.
Some nursing homes, especially senior housing and skilled nursing facilities were hit hard by Covid-19 infections as fewer people sought to move in, leading to lower occupancy rates. In the second period of 2021, occupancy began to grow again, but it is still several percent growths below what it was before the crisis.
Markets for Apartments and Houses
New development restrictions will keep rents and property prices high in the foreseeable future. It is becoming increasingly difficult for many families to keep up with rising rents and rising property prices because of rising affordability.
The rental and housing markets tend to move in opposing ways, with a robust housing market accompanied by weaker rental housing and vice versa. During the epidemic, however, the demand for greater living space has lifted rental and homeownership markets to historic profits while individuals work and study from home.
According to our forecast, strong property and residential markets will fuel another year of growth for self-storage.
Self-storage As strong real estate markets and real estate purchases have fueled demand for storage, REITs have performed exceptionally well during the pandemic. As of 2021:Q3, funds from operations (FFO), the much more prevalent metric for REIT earnings, were 42 percent higher than before the pandemic, while the stock market had gained 57 percent year to date as of late November. If the number of people who work from home drops, there is a risk that extra spaces in homes and flats will no longer be needed.
Conventions and Business Trips
According to Dr. Jordan Sudberg, hotel and entertainment establishments that cater to business tourists will enjoy a faster return to growth in 2022.
Because so many meetings and conferences are still held virtually, business travel has trailed behind the resurgence in leisure travel. However, business travel and conferences are becoming increasingly common, and face-to-face meetings can be more effective when negotiating a significant contract or selling a brand extension.
A Place on the Internet
Digital real estate sectors, including data centers, towers, and industrial REITs, will continue their rapid expansion in 2022.
Communication channels provided a lifeline during the pandemic, from business online conference meetings to consumer e-commerce purchases and online movie streaming. Even as the economy begins to recover, demand for digital real estate sectors such as data centers, infrastructure/cell towers, and industrial/logistics facilities continues to grow.
Return to Work
For many workers, flexible work-from-home arrangements will make it possible to skip the daily commute for a few days each week.
Even though the monthly employment report from the Labor Department shows that millions of workers are returning to work each month, many companies are moving toward a flexible work model.
Rather than how many employees commute each month, keep an eye on this key development. As a result, you should pay attention to the peak demand for commercial space on days when everyone is in the workplace for team communication. On days when employees work from home, keep an eye out to see if employers reorganize the coworking space to minimize individual workstations or if there is less density in the office.