A Few Trends We Expect for 2021

After the year we had, I thought I’d share a promising market update as we head into 2021. While the dollar volume for commercial real estate in the U.S. was lower year over year in the fourth quarter of 2020 compared to the same period in 2019, industry experts see several trends poised to positively influence the commercial sector this year -- especially as the coronavirus vaccine looms larger and larger on the horizon.


Here are a few trends we expect to see in 2021:

• Digital transformations: Within weeks of COVID’s arrival, most of the workforce went virtual. The unprecedented need for technology and digital tools that followed found many commercial buildings unprepared. Making these necessary changes will be essential to businesses that want to emerge from the pandemic ready to respond to a permanently-changed commercial market.
• Thriving Class B and C office spaces: Class A office space (the best-looking buildings with the best construction) isn’t going anywhere, but change is here to stay in the way we look at expansive office environments. Meanwhile, Class B and Class C properties are making the grade and performing exceptionally well.
• Demand for warehousing and industrial space: Logistics companies continue trying to keep up with the explosion in e-commerce transactions, which were already rising before the pandemic.  Experts are expecting 250 million square feet of additional demand for warehouse space in 2021.   
• Increase in “ghost kitchens:” There’s no doubt the food and beverage sector has been forever changed by last year. One piece of evidence is the increase in “ghost kitchens'' -- kitchens designed solely to serve to-go and delivery food orders. They were gaining in popularity before the pandemic and will continue to be a focus as developers and restaurateurs adjust to the shift in online ordering.
• Creative multifamily conversions: Converting other types of buildings into multifamily apartment complexes is growing popular as construction costs have risen. This type of housing brings more certainty to landlords and meets a growing need as housing becomes more expensive.

Financially, experts are cautious about the year to come--financing may tighten, so CRE investors are encouraged to strengthen their asset portfolios.  Fortunately, rent prices are already stabilizing throughout much of the US despite the drops seen in major metros.


If you need more information or up-to-date info and guidance this year, I’d love to help. Give me a call and let’s connect -- I look forward to hearing from you!