We are starting off 2021 with a fresh perspective and the hope that 2020’s mess is behind us. But, in order to succeed in 2021, we will have to work together to get through the pandemic and reactivate the economy.
Looking back at 2020, we did see some sectors of the industry closing on a strong note. The industrial market continued to see demand, outperforming the nation as a whole with higher rental rates, with lower vacancy and cap rates.
Multifamily remained strong overall, though some obvious increases in vacancy have occurred. Many units were delivered to market in 2020, with several large-scale projects still underway for 2021 completion and opening. The absorption of these new units will be contingent upon activity and demand. For the Philadelphia market that relies heavily on Eds and Meds, the solution will be to reopen college campuses, bringing students back into the rental market.
From an economic standpoint, we must diagnose the true problems in the market, identify troubled assets and determine where market demand will be going forward.
Office is at the top of the list, looming with questions on how the return to the office will look. For many companies, the office will look different. We expect to see more telecommuting in the future, with office visits as needed only.
For others, the need to return to the office to reconnect and collaborate is a must. But how does this effect the workplace? What does the future of office look like? Will social distancing determine future office layouts? Will shared desk space be a thing of the past? Will more communal collaboration rooms be installed to accommodate team meetings? These are all the questions owners and operators will have to address as vaccines arrive and people are ready to return to the office.