MIL-OSI Economics: Is There a Future for Investing in Office Buildings?

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Source: Breitling Energy

Headline: Is There a Future for Investing in Office Buildings?

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The covid-19 pandemic has adversely affected commercial real estate and has also generated many innovative possibilities for the Commercial Real Estate (CRE) market this year including sending payments and informs with a single click of the button, efficient online communication, and affordable rental prices.

Commercial real estate has gradually started recovering from covid-19’s impact this year. The recovery might have its setbacks and difficulties, just like it was in 2020. Nonetheless, this could mean that many opportunities are waiting for investors and business owners. Knowing the latest predictions and trends will help make smart decisions in the commercial real estate market in 2021.

Here is what you need to know if you’re planning to invest in office buildings.

Latest Commercial Real Estate Trends

John D’Angelo, Deloitte’s Real Estate executive recently said that the coronavirus pandemic has increasingly sped up how fast technology has been adopted in commercial real estate. CRE companies across the globe are also doing some research to understand:

  • How to identify the vulnerabilities and challenges at the portfolio and asset level.
  • Different ways to boost efficiency.
  • Establishing secure and safe building spaces
  • Evolving behavioral trends

The CRE corporations will familiarize themselves with the outcome of this research because these are essential trends that will mostly impact the CRE sector. People who understand these trends will even be able to offer their clients a better experience.

Because of the covid-19 pandemic, the frequent lockdowns and other strict stay-at-home measures have led more firms to have their workers working from home. Although it might seem like there will be no use for more office spaces in 2021, there are many other opportunities in the commercial real estate market for more commercial offices that weren’t there before. A vacancy in high traffic areas makes this a perfect time for the commercial owners that are looking to expand.

Although most businesses are waiting to bring their workers back to the office, these are without doubt good reasons to have an office in the post-covid-19 environment. In the office, workers have extra space to work together, increasing efficiency and cooperation. CRE investors and owners ought to acknowledge that even during the covid-19 pandemic, there are numerous business owners out there that are looking for cost-effective office spaces and consider this as they make crucial decisions in life.

Ecommerce, a fast-growing industry before 2020, fell more during the covid-19 pandemic. Essentially, third-party logistics and retail stores aren’t optimizing or growing their fulfillment center footprint but most of them are turning from the just-in-time inventory models to a new just-in-case strategy as they try to prevent the shortage of goods experienced last year. As the trend continues, most online shops across the globe will have to lease the warehouse for the growing industries. This will offer steady raises in leasing opportunities in the commercial industry market that investors and owners should take advantage of.

The Future Of The Commercial Real Estate Market

Because of the existing pandemic threats, predictions for the future of the commercial real estate market are still not clear, but with the successful vaccine rollouts, there are many positive signs that recovery of the office buildings market is well underway.

  • Big companies with thousands of workers working from home would also have an impact on the office space sector, based on what type of new standards arise as we move into the future.
  • Investors need to choose well-directed office REITs for growth or if you know the industry better, you can look for a better deal on office space leasing. Keep in mind that different factors such as restoration of normal travel and vaccination rates might result in possible revival starting in early 2022.

References

Paul R. La Monica. (2020, September 22). Commercial real estate Flounders as housing market booms. CNN. https://edition.cnn.com/2020/09/22/investing/commercial-real-estate-recession/index.html

Arnold, T., & Chatterjee, S. (2021, March 10). Opportunity from crisis: How investors are playing the post-pandemic property market. U.S. https://www.reuters.com/article/us-realestate-office-retail-insight-idUSKBN2B21NG

(n.d.). Forbes. https://www.forbes.com/sites/forbesbusinesscouncil/2020/03/11/the-three-new-rules-of-investing-in-commercial-office-space/?sh=47b7c7767ecd

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MIL OSI Economics