commercial real estate vacancy rates In a Post-Covid WOrld
There is an unfortunately high commercial real estate vacancy after the pandemic. A past high was 17% in 2010 but the rate after the Covid-19 pandemic is holding steady at a dramatic 19%. The recovery will look different by industries served. Retail and office spaces will face a long recovery but demand is increasing for areas like industrial, and logistic based spaces.
The brick-and-mortar retail industry was hit hardest by the pandemic. Online shopping was already hurting this sector and the lockdowns sped up the processes. This area hasn’t shown recovery with the availability of a vaccine. The vacancy rate has continued to rise several percentage points even after its release.
Office space is another area where recovery is slowed. One statistic shows that 67% of companies expect to be working from home permanently or for an extended amount of time. The demand for large packed-in office spaces has decreased but the companies still looking for office space will likely be willing to pay a premium for open-concept, socially-distanced, collaboration spaces instead of the normal “cubical farm” look.
Industrial spaces are the only area where demand increased. The logistics, manufacturing, and construction, have all faired well throughout the pandemic era. These industries have grown while others struggle and is a big area of opportunity.
The years after the Covid-19 pandemic are an uphill battle for the CRE industry. Commercial real estate vacancy is high in areas that were once in high demand. Experts are estimating that the average demand won’t return to pre-pandemic levels until 2026.
CRE professionals need to have intentional strategies for their business goals and they need to optimize their marketing to stand out in a more competitive climate.
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