How COVID-19 will reshape commercial real estate development

As we have seen in previous economic downturns there clearly will be winners and losers in the post-COVID-19 economy. The short-term effects of government-imposed restrictions has pushed the pause button on almost all development projects, with a few “essential” exceptions. Additionally, deal flow is also in limbo because transactions, as contemplated, do not reflect the new realities we face. Longer term, the effects will vary based on asset class. Some asset classes are primed to come out of COVID-19 stronger than ever, while others will struggle to adapt to the new normal. Industrial development will be the clear winner after the COVID-19 recession as the pandemic is further accelerating changes in consumption that were already underway beforehand. E-commerce usage has exploded amidst lockdowns and quarantines, as many shoppers are now shopping online for the first time, growing accustomed to these services and increasing their usage. The COVID-19 crisis is morphing consumer habits and the resulting increase in demand for warehouse and distribution space following COVID-19 will be high. Additionally, the variety of goods that consumers are now shopping for online, especially groceries, will require consideration of how to deliver more diverse inventories to the consumer from both a regional and more localized basis. Multifamily development will be mixed. After seven years of sustained new deliveries and positive absorption, the multifamily development pipeline remains robust. With numerous projects under construction, site plan approved or still in the entitlement phase, tens of thousands of units are poised to come to market throughout the region. READ MORE

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