2021 Commercial Real Estate Trends

The COVID-19 pandemic has affected every industry, including commercial real estate. However, while many of the current trends in the industry are due to last year’s global events, there were a number of real estate trends that were well underway before the pandemic.

Here are a few of the biggest 2021 commercial real estate trends.

Increased Production and Manufacturing

Throughout the year 2020, the United States saw a major increase in interest for domestically made goods, particularly products pertaining to COVID-19. We often heard concerns from leaders about the speed and the accessibility of bringing products to the market so it should come as no surprise that the need for manufacturing and production space will continue to grow.

Furthermore, due to the major surge in e-commerce purchasing, things like groceries and home goods online became increasingly popular. The extra demand calls for more industrial space such as distribution centers and warehouses.

Direct Government Support

Many state’s budgets have a deficit for one of two reasons. First, the typical tax revenue is not flowing due to the large number of individuals who are unemployed because most unemployed people do not have money to spend. Secondly, the state budgets with a deficit may be the result of commercial real estate owners who have been unable to collect from tenants who were hit hard during the pandemic. With requests such as rent concessions or forbearance agreements many buildings that are made up of tenants, (such as office buildings, malls, and shopping centers) have not been operating anywhere near full capacity.

Due to the cycle of consumers not spending locally, the commercial real estate owner not receiving full rent, and then the CRE owners asking lenders for concessions or forbearance, the state cannot collect tax revenue.

The new presidential administration may begin providing increased stimulus to not only individuals but to states which require immediate assistance. With the government’s new infusion of support, the burden that has been weighing on commercial real estate owners may be eased. Collections would allow commercial landlords to pay their creditors, particularly, municipal, state, and federal governments the taxes that are owed.

If there is in fact a federal bailout for states and their deficits then the result could be that states stop leaning on commercial real estate wonders to help fill the gap, allowing the CRE owners to become a bit more flexible with their tenants.

Originally published on Jack Nourafshan’s website.

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