- Property Managers
- Equity holders or portfolio managers
The Urban Land Institute and PwC released the 42nd annual Emerging Trends in Real Estate 2021 report at ULI’s virtual fall conference. Trends on how real estate will be shaped within the next 2 years were focused upon as well as the latest impacts and outcomes from the pandemic and various other factors. Geopolitics and social unrest are the largest trends for during and after the recovery. Along with all the proposed encounters the industry faces, many of those who were surveyed did not think the impact would be as bad as we believed it would be. Around 40% of respondents said that Covid-19 has no major importance to them when discussing the real estate markets and some 80% felt optimistic about next year’s potentials.
Now, here is my vision: We all understand that most of these issues are short-lived. We will overcome the pandemic, the election will come to an end with either of the two candidates/parties in power, and all current social unrest will find its way to a resolution.
Now, here arises the question: are these the only issues that the real estate market is struggling with? These all seem to be short-term problems that may find short-term solutions.
We all know that these major but short-term shifts are less worrisome in the long term. So what are the other issues that many seem to ignore? What are the more problematic issues at hand? Shifting and evolving markets are trending toward technology, due to e-commerce, remote schooling and remote working. We are already seeing major shifts in regions as people have the capabilities to work from anywhere in the country. So why live or work in major overcrowded and overpriced cities? For the near future, I believe second-tier cities will start seeing a major spike in population growth on many levels due to these short and long-term issues and better opportunities.
Many discussions on this are trending in various forums. Employees have shown a tremendous interest for working remotely. There is nothing new about this by any means, but it has now proven to be successful with the masses of the work force being at home. This tendency is also making its way into the trend of shopping and home teaching. Stats show that productivity spiked in performance but engagement went down tremendously. Now moving forward, more companies are looking to find a perfect balance.
At the Urban Land Institute and PwC virtual conference, Macro Trends Advisors LLC’s Managing Partner, Mitchell Roschelle said, “It’s all those casual encounters you’d normally have in the workplace that aren’t happening. Those in my view are where innovation comes from. Businesses know that in order to grow we need to get the workforce back together.”
The question is still valid. How will all of these trends and difficulties actually affect the real estate industry? Every property owner needs to dive in and understand their own tenants business practices, their struggles and their financial behavior. In turn, landlords will be better informed on how to retain these tenants. Landlords and property owners need to get into how the tenants are doing and how they can help them survive as client retention is by far less costly than new client acquisition.
As to vacant space, landlords will need to come up with some alternate ideas as the norm may no longer work in a new reality. Property owners will need to review their layouts and plans and reconfigure their space into an evolved concept. They may need to subdivide the spaces in smaller micro, shared or co-spaces as these are becoming more and more popular throughout every spectrum of the real estate market. More on this to follow.
I want to hear what you have to say. Add your thoughts to the comments and let’s keep this conversation going.
– For Real Estate Trends, I’m Moses Gross.