While sheltering in place during the pandemic’s depths, Americans sought diversions. For many, that meant pet adoption. Some 48% of Millennial and Gen Z folks indicated they intended to adopt in 2021. But ever since those pets and owners bonded, life has been anything but stable. First, many pet owners returned to the office, leaving Fido and Fluffy at home dealing with serious separation anxiety. Then, homo sapiens were back working from home, as Covid’s newest variant raged out of control. Next, those owners may be gone again, back to offices and once more disconnected from their pets.

What’s a pandemic pet – or its human companions — to do?

While the next stage in the drama is still unknowable, what many believe certain is the U.S. needs more rental housing that permits pets to live alongside their humans. Click to read more at www.forbes.com.

While it’s true that real estate is generally one of the most reliable markets for investment, it’s also a fact that the industry runs on cycles. The COVID-19 pandemic accelerated and even upended many of those cycles. Even now, nearly two years after it took hold in the United States, the pandemic continues to have a see-saw effect on markets.

Consider the industrial sector’s upward trajectory in relation to retail’s brick-and-mortar downturn. This inverse relationship resulted from the accelerated adoption of e-commerce, which was accelerated by the pandemic. The commercial office market has taken a hit in urban centers, but suburban office leases are on an upward swing. Hospitality is beginning to come back to life after a prolonged slowdown. But now the industry is reeling from a labor shortage.

The pandemic is not the only factor that is driving rapid change, of course. Multifamily housing continues to surge, thanks in part to a lack of single-family housing stock. The cost of living and discontent are also prompting people to rethink where they live and work. Population shifts are disrupting long-standing real estate investment strategies across geographical boundaries.

In short, 2021 was a year of flux, and 2022 looks to promise more of the same. So how can investors, developers, owners and buyers prepare? Here are the trends to watch in the coming year:

A return to the ‘burbs: Generous work-from-home policies, cost-of-living considerations and social unrest are fueling a shift from urban centers to the suburbs. Likewise, the success of remote-work arrangements has many commercial office occupiers rethinking just how much space they really need – and where it’s located. For now, suburban rings and smaller cities are the best bet for stability and investment opportunity.

The great migration: The migration of people isn’t limited to the urban/suburban divide. People are also moving away from the coasts and across state lines in search of lower-tax communities where their dollars will go farther. This movement will have far-reaching implications across all real-estate sectors, from housing to industrial to hospitality.

Housing demand: A lack of housing stock, soaring housing prices and the movement away from the urban core means multifamily housing should remain strong in 2022, particularly in suburban and rural communities. However, a buyer’s market may be around the corner. As housing inventory increases, prices should come down and the demand for multifamily housing may likely level off over time. Expect to see a shift occur in late 2022 or early 2023.

Evolving consumer behaviors: Even as people talk about a return to pre-pandemic normal, some things may never be the same – including retail shopping. E-commerce adoption by U.S. households skyrocketed during the early months of the pandemic. Now consumers have become accustomed to the convenience of on-demand delivery. It’s no surprise, then, that retail will probably see anemic growth while the industrial and logistics sector will flourish in the coming year.

Workforce challenges: The COVID-19 pandemic has reshuffled the workforce in ways that could not be anticipated last year. The hospitality sector was particularly hard hit as millions dropped out of the workforce or found work in other sectors that offered more stability. Now, as people return to traveling, the industry is scrambling to find enough help. This staffing shortage may depress growth until more people re-enter the workforce.

Tax changes: Tax hikes appear to be on the horizon in the form of the Build Back Better Act. Owners, developers and investors will need to wait until a final bill is voted on before making long-term investment decisions. The good news? Many of the strategies that have been used in the past to defer tax liabilities will likely be available going forward.

Accelerated technology adoption: Technology services and solutions are rewriting how the real estate industry does business – and not just in terms of bridging the home and office environments. The ease of working with and for a company is emerging as a deciding factor in winning over clients and talent. Stakeholders will need to invest in a strategic digital transformation plan if they want to keep pace with stakeholder expectations. Digital capabilities will also be key to managing data and predicting outcomes – both of which will be necessary in this dynamic landscape. Click to read more at www.rednews.com.

How Wipfli can help

Our seasoned real estate professionals know how to turn obstacles into opportunities. Whether it’s tax, compliance, process, people or technology, we can help you achieve your goals.

James Lockhart is the national leader of Wipfli’s real estate practice. He is based in the firm’s Minneapolis office.

A record-setting year. That’s what 2021 was for the U.S. industrial market.

The evidence? It comes from Cushman & Wakefield’s fourth-quarter industrial report, which shows that the U.S. industrial market saw absorption of more than 500 million square feet in 2021. That’s a record-high number, according to Cushman & Wakefield.

At the same time, the U.S. industrial market’s vacancy rate fell under 4 percent for the first time ever, hitting 3.7 percent in the fourth quarter of the year.

And in even more good news, industrial rental rates hit an average of $7.39 a square foot, up 9.5 percent in the fourth quarter of this year when compared to the same quarter in 2020.

“We are seeing unprecedented low vacancy and incredibly high demand for industrial space across the United States,” said Carolyn Salzer, Americas head of logistics and industrial research for Cushman & Wakefield, in a statement. “Demand is outpacing supply by a wide margin – almost 50 percent.”

In other impressive statistics, Cushman & Wakefield reported that new industrial leasing activity totaled 879.9 million square feet, also a new record.

The under-construction pipeline also set a new record, with 568.2 million square feet in development across the country, 54 percent above 2020 levels.

“Developers are setting new records on the pipeline yet falling short of meeting demand for space when it comes to deliveries due to pandemic related issues, particularly for warehousing and e-commerce facilities,” said Salzer. “Until significant new supply is able to be delivered at the rate of demand, we expect tenants to continue to struggle finding the space they need. The market is as competitive as it has ever been.”

Texas was an attractive destination for people moving last year, beating Florida and Tennessee for the largest net gain of one-way U-Haul trucks as job growth, lower housing costs and no income tax drew newcomers.

The Lone Star State regained its No 1. spot, which it held from 2016 to 2018 before dropping to second in 2019 and 2020, according to U-Haul’s annual Growth Index.

The truck rental company ranks “growth states” by examining the net gain of one-way U-Haul trucks entering a state versus leaving that state in a calendar year.

Arrivals in Texas rose 19 percent and departures increased 18 percent over 2020, with inbound trucks making up 50.2 percent of all one-way U-Haul traffic in the state last year. Click to read more at www.chron.com.

When Elon Musk unveiled the Tesla Solar Roof in 2016, it was the first that many people had heard of solar shingles. But the idea of a roofing product that can both generate energy and blend in with regular asphalt shingles has been around for decades.

Companies from Dow Chemical Company to the now-defunct BP Solar have given the solar shingle a shot, but many of these products are no longer on the market. Solar shingles have been expensive to manufacture and install, and are not yet as efficient as regular solar panels. That’s kept them from breaking into the mainstream.

Now GAF Energy, the sister company to one of the largest roofing companies in the world and a division of privately held Standard Industries, is launching a new solar shingle effort. It just released a product called Timberline Solar, which the company says will be cheaper and more reliable than Tesla’s Solar Roof. It just won the Best of Innovation Award for Smart Cities at CES. Click to read more at www.cnbc.com.