March 2021 marks one year since the World Health Organization declared the COVID-19 outbreak a global pandemic, triggering a domino effect that has had a profound impact on Americans’ daily lives, as well as the commercial real estate industry. REJournals spoke to experts in the retail, office, multifamily and industrial fields to reflect on how each sector responded to the challenges posed by the pandemic and their expectations going forward.

RETAIL | “… everyone is so hungry …”

“Retail, more than other sectors of commercial real estate, offers its share of volatility and requires those of us who work in the sector to react and evolve quickly,” said Terry Ohnmeis, director at Cushman & Wakefield. He describes the industry as being at a peak in terms of occupancy, rent growth
and overall vibrancy in the first quarter of 2020. Retail being “more nuanced” than other property types, Ohnmeis acknowledges some locationally challenged malls, but generally, if Class A space became available in “A” and “A+” locations, he said it instantly had a dozen offers on it. “This run actually extended longer than many thought it would and left us wondering when it would end and why,” Ohnmeis said. “Still, no one thought it would be a pandemic until the reality of COVID-19 hit.” Click to read more at www.rednews.com.

Last year will definitely be one for the history and economics books. It affected everybody differently—for me, more walks with my dog, Tessa. I was even able to shed a few pounds—not enough, though! Working from home and not traveling meant more time with our families. Zoom, Webex, or Teams calls are the new norm and will forever change our private and professional lives. I know we all hope that this virus will soon be in our rearview mirror, so we move on with our lives and enjoy getting together with family, friends, and business colleagues to rebuild what this virus has destroyed. The commercial real estate industry started strong at the beginning of 2020. During this long-lasting and ongoing economic cycle, all the signs of another booming year were present until it was thrown into a screeching halt in March. Initially, the lockdown threw the commercial real estate market in a state of shock and confusion for a moment but low and behold. It offered some extremely positive surprises, especially as it relates to multifamily apartments. As a result, it manifested itself in the following capital market trends: An enormous amount of pent-up capital has made the pursuit for “for sale” product extremely competitive. Click to read more at www.dmagazine.com.

KEY POINTS

Retailers are eager to double down on brands that remained strong throughout the pandemic-induced recession. Or, they’re excited to test fresh concepts that can bring in new customers. And less-expensive rents are making these opportunities irresistible. Year to date, retailers in the U.S. have announced 3,199 store openings and 2,548 closures, according to tracking by Coresight Research. The firm tracked a whopping 8,953 closures, along with just 3,298 openings, last year, as the pandemic upended the retail industry and pushed dozens of businesses into bankruptcy. Looking further back, there were a total of 4,548 openings announced by retailers in 2019, and 3,747 in 2018, Coresight said. So far in 2021, openings are already on pace to top each year prior, it said. For the first time in years, retailers across the country are planning to open more stores than they are closing. From Ulta Beauty and Sephora to Dick’s Sporting Goods, Five Below and TJ Maxx, businesses are rebounding from the Covid pandemic and dusting off expansion plans that were put on hold. In the latest example, athletic apparel retailer Fabletics said Thursday that it will open two dozen stores in the United States this year. Click to read more at www.cnbc.com.

KEY POINTS

• One year after many office workers were sent home due to the Covid pandemic, executives face big questions about how much space is truly needed.
• REI has laid out concrete plans for fewer days in the office and ditched a plan for a centralized corporate campus.
• Most executives agree there are advantages to both working in an office and working from home. As Americans return to work, they likely will be doing a little bit of both.
• Office landlords are hoping to see vacancies dwindle and leasing transactions pick back up. They are touting the office as a collaborative space that boosts productivity.

Click to read more at www.cnbc.com.

There are many aspects of the project management process that have changed in the past year due to the effects of COVID-19. As companies begin to reintegrate their operations and return to the office, it is important to consider changes in municipal or corporate regulations and be sensitive to employee wellness and office interactions. Companies should partner with experienced project managers to help them navigate the entire real estate process from a property management perspective while reaping the benefits of their market expertise. Site selection is arguably the most important step clients face in their commercial real estate planning. Due to the impact of COVID-19, the availability rate of office space increased to 20.6 percent by year-end 2020 (up 3.4 percent from 2019). Now more than ever, thinking outside the box is key as space utilization decisions are being made. As one innovative example, companies could consider selecting vacated big-box buildings or warehouses to build-out their space. These types of spaces typically have lower rents than traditional Class A or B office buildings and can be a more cost-effective approach for companies looking to reduce their real estate costs. Additionally, many companies are currently considering maintaining work from home policies for big portions of their workforce, which will, in turn, reduce their space needs and their operational and facilities management costs. Utilizing a workplace strategist is valuable in this stage of the process as it can help narrow down building options and identify the best strategic approach to site selection. Click to read more at www.dmagazine.com.