Office absorption has stalled.
Industrial is on fire. Low vacancy rates continue to make it a challenging environment for occupiers.
Multi-family is at all-time highs.
Hospitality and bricks and mortar retail continue to reinvent.
Industry experts across the country are pointing to significant changes in most real estate categories; from retail to industrial, home to office, and everything in between. As we move forward, there are a few very important concepts that will play out.
Retail malls have faced a decline in the past, only this time it has been accelerated and shown its vulnerabilities. A record number of mall retailers have already entered into bankruptcy protection with more to follow. A common thread among most was their inability to reach a large online retail audience with any success. Destination retailers with a strong product offering and differentiation will prove successful. Driving value is key as consumers feel the burden with a lower dollar and high inflation.
Office demand is starting to rebound, however, the cycle is far from over. Typical leases in the US average 5 years or longer, with product type and market exceptions. The full outcome is still being sorted out as occupiers will find it increasingly difficult to continue working remotely at the same time facing staffing and safety concerns. Flexibility in office space, lease terms, and employee options will take center stage.
Large companies will continue to evaluate moving from a single corporate office environment to regional hubs. Multi-family and housing costs are at historic highs, placing additional pressure on workers. Data will continue to play a larger role in decision making reflecting the overall submarkets labor force, safety, access, housing, tax impacts, and viability for business’s success.