Tracking the Impact of COVID on the Commercial Real Estate Market
The Pandemic Continues to Pressure CRE
The commercial real estate market continues to feel the pressure of the COVID-19 pandemic. Moody’s Analytics REIS reports that apartment development in the U.S. is expected to be down 15.6% post-Covid-19. They predict that office development will drop by 10%, and brick-and-mortar retail will fall by another 15.7%. Industrial development is expected to rise by 3.6%.
The NAR Tracks the Pandemic’s Impact on CRE Sectors
The National Association of Realtors (NAR) is tracking the pandemic’s impact on the commercial real estate market (CRE). You can also read and download the reports by clicking the links below. Here are some highlights:
- Higher vacancy rates across all property types except in the industrial sector.
- US mall closures projected to accelerate.
- 2nd and 3rd quarter e-commerce retail continued to grow.
- Significant bankruptcy filings and retail closures.
- Commercial sales contracted at a slower pace in Q3 2020.
- A slight recovery in suburban office sales in Q3 2020.
- A slight uptick in sales of Industrial warehouse and flex properties.
- On average, REALTORS® reported little difference between appraisal values and REALTORS® assessment of property values.
The industrial sector reaped the rewards from a shift to e-commerce:
- Online retailers need more than three times the logistic space of brick-and-mortar.
- E-commerce growth underpins the increase in demand for industrial warehouse/distribution space. As e-commerce continues to increase, demand for logistic space will continue to increase.