The Fallout of the Covid-19 on Commercial Real Estate Sectors: Our Projections
The majority of the world has been home for the past year, and real estate is one of the sectors most affected by the Covid-19 pandemic. Even a cursory observation of the news will inform you about the retailers and restaurants shutting their doors as a result of the pandemic and the restrictions imposed by governments. In our article, we will tell about our observations of real estate market 2020-2021 trends and the overall future of the commercial real estate.

Closing retailers is only one of the more obvious effects of the pandemic and retail real estate is not alone, the other four major asset classes (office, industrial, multifamily, and hotels) have also been impacted. Perhaps surprisingly, the effects are not all negative, more accurately, it could be described that the pandemic has accelerated some of the trends that were already taking place.

Some of these trends have likely advanced by 5 or 10 years if one were to try to envision the timeline without a pandemic. The pandemic is likely to be the catalyst for one of the largest shifts in commercial real estate market fundamentals.

# What is the Future of Commercial Real Estate?

It is expected that commercial real estate transactions will experience a little stronger upturn across some sectors in 2022. For example, brokerages anticipate a small upsurge in purchases of land (5%), industrial warehouses (3%), and Class B/C apartments (1%) in the following year.

However, brokers foresee a decrease in transactions for retail, office, and hotel/hospitality properties. As for land purchases, realtors predict significant sales rise for residential land (8%), industrial land (7%), and recreational land (5%), as well as agricultural land (5%).

Besides that, most commercial real estate analysts foresee prices to increase next year across most commercial property types, except for office, retail, and hotel properties.

In addition, 38% of brokers expect their international commercial property sales will return to their pre-pandemic norm only in 2023 and 3% think that their international real estate business will never return to its norm. And it means that it’s still too early to expect significant sales growth in the nearest future.

However, one of the best hints was given by an actor, Will Rogers, who said: *“Don’t wait to buy real estate. Buy real estate and wait.”*. Any investment is a long-run process so to reap the profit, you, probably, need to start now.

Need access to the full report with stats on the Office, Multifamily, The Hotel &amp; Hospitality Real Estate Sectors based on the brokers' survey answers? Let me know in the comments 👇 

#
[{"id": "hb6ciwl", "text": "&gt;As for land purchases, realtors predict significant sales rise for residential land (8%)\n\nI can confirm.  Land is absolutely on fire right now and I have had every recruiter for just about every national and local home builder contacting me about joining their land acq teams.", "replies": [{"id": "hb6d8at", "text": "Thanks for sharing!", "replies": [], "depth": 2}], "depth": 1}, {"id": "hb6lyvv", "text": "You should separate out medical-office as a sub-class with its own fundamentals and trends as compared to \"worker bee office.\"", "replies": [{"id": "hb6qplu", "text": "An interesting point, will consider for future reports and analysis.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hb7kbl4", "text": "AZ is absolutely on fire across all sectors! We even have office space being leased at crazy rates", "replies": [], "depth": 1}, {"id": "hb7p221", "text": "Construction costs are going to play into so much of this.  If we get those down cranes everywhere baby!  if we don't, then I mean cranes everywhere but maybe less cranes.", "replies": [], "depth": 1}, {"id": "hb927b0", "text": "I\u2019d like the report, thanks.", "replies": [], "depth": 1}, {"id": "hba1kwj", "text": "Pls share report", "replies": [{"id": "hbaa8q5", "text": "Please take a look [https://ascendix.com/blog/future-of-commercial-real-estate/](https://ascendix.com/blog/future-of-commercial-real-estate/) and let me know your thoughts.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hba1m20", "text": "I\u2019d like to learn about the full report", "replies": [{"id": "hbaabmi", "text": "Here it is [https://ascendix.com/blog/future-of-commercial-real-estate/](https://ascendix.com/blog/future-of-commercial-real-estate/) Need to know your ideas/suggestions on it.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hba8he7", "text": "Legal marijuana? Underutilized buildings? Projections? Thank you.", "replies": [], "depth": 1}, {"id": "hbly8e2", "text": "Great research report. Specifically on technology trends impacted by Covid, one of the areas is long distance investing which was already booming with all the syndicates popping up which allow investors to participate in an investment located anywhere in the world basically with very limited investment. Some of the sites helping such individual investors in getting data in terms of numbers as well as vibe of a location: [www.city-data.com](https://www.city-data.com), [thevibeview.com](https://thevibeview.com)", "replies": [{"id": "hbm2n0f", "text": "Thanks for the comment!", "replies": [], "depth": 2}], "depth": 1}, {"id": "hbt9ej2", "text": "This boom smells like 2006. Everything was booming and going great until it didn\u2019t anymore. Most don\u2019t understand that all real estate relies on debt and if that debt gets disrupted in any way then we will see manure hit the fan very fast.", "replies": [], "depth": 1}, {"id": "hc9ppnu", "text": "Any thoughts about the prospects for rezoning large commercial office spaces in major metro areas into residential/condos? I see it as the only potential solution for these ghost malls of the near future.", "replies": [{"id": "hcbcctq", "text": "In rare instances it might be possible, but unlikely to be a major consideration for building owners especially at this point, because: \n\n1. The impact that work-from-home has on offices will have to be confirmed after the pandemic - the highest and best use might still be offices \n\n2. If they have a significant vacancy they might run the numbers, but most offices are still significantly leased and investors are likely to take a wait-and-see approach rather than undertake significant capital projects at an uncertain time(residential in major metros has taken a hit from the pandemic also) \n\n3. Office buildings are often not easily converted to residential, so it is difficult for them to compete with purpose-built residential; therefore, the office market would have to be in dire shape (and dire compared to residential) to invest the capital to compete with the low-end residential product \n\n4. Cities are often reluctant to rezone employment lands to residential.  \n\nThe most likely result is that existing product will struggle with vacancy, while new developments will be strongly considering alternative options for their sites.\n\nThe most likely result is that existing products will struggle with vacancy, while new developments will be strongly considering alternative options for their sites.\n\nWith regard to ghost-malls, they are a slightly different case for a couple of reasons: \n\n1. They existed prior to the pandemic, so the trend is well established and owners either know they need to address it or invested in them with development plans in mind \n\n2. They are on large sprawling sites and demolishing and redeveloping them is comparatively easy and this is already occurring with redevelopment into mix-used centers or even near-city industrial distribution.", "replies": [{"id": "hcbrm7c", "text": "Thanks for the thoughtful reply :)", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]