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Allentown, PA; February 8, 2021 – NAI Summit announced the release of the NAI Global Real Estate Market Outlook for 2021.
The report is the result of an internal survey of NAI Global brokers from over 30 U.S. states and a dozen international offices with responses between October 7 and October 29, 2020.
The clear takeaways from the recent NAI Global Real Estate Outlook survey, especially in the context of survey responses from six months earlier, is that NAI Global real estate professionals have largely adjusted to living and working during the pandemic. Whether it is called concern, deeply concerned or fear, we’ve seen what high unemployment looks like and feel less threatened by it. The oil and gas industry is in a deep recession, yet only 1% of survey participants think it is a major factor in our economy. The Coronavirus is a terrible blow to our economy and way of life, yet the perception of its impacts—while still bad at 32%, is becoming more manageable. Or simply, we have grown accustomed to it. Work from home (WFH) was a novel experiment in 2020, and we still don’t know how, exactly, companies will adjust business operations once we get to a relatively safe post-pandemic period. However with the same level of response for concern – just 6%, it seems to suggest that WFH is not that big of a deal—at least for the real estate market. We’re not calling this “the new normal” yet because we are certainly not there, and probably will not be any time soon.
The survey also revealed what has been said before – that the recovery from the pandemic is taking shape at different speeds and is not at all consistent geographically. In other words, it is better in some markets and worse in others.
Office Market Highlights
- Over the next six months, 59% said the office market would be flat, 18% thought it would heat up yet 8% responded that office markets would cool. By comparison, the spring survey (published in summer), 9% said tenant demand would be hot, 25% said it would be cold and similarly regarding office market conditions overall, six months ago 15% of NAI office brokers thought the market would heat up while 13% projected the office market would cool down. In other words, by fall of this year and compared with six months earlier, the outlook for office market conditions was less pessimistic and was perceived to be more stabilized with potential for greater improvement next year.
- Even if there is a whiff of optimism for the office market, recovery from the pandemic will take another 1-2 years, according to the majority, 53%, while 23% think the recovery will happen in the next 6-11 months and 16% reported it would take over three years. 4% projected the recovery is closer at hand, or 1-5 months away, while the same percentage – 4% said “it will never return to pre-pandemic levels.”
Industrial Market Highlights
- As spring turned to summer and then fall, it became clear that the industrial real estate sector was the strongest among the property verticals. That perception was fully endorsed by NAI Global professionals in the October survey, with 78% of them stating the market for industrial real estate was hot. 20% of responders said it was flat in their respective markets while only 2% said it was cold.
- A majority – 54%, said their industrial markets had already recovered since the onset of the pandemic, while 11% said recovery would require another 1-5 months, 23% thought recovery would take 6-11 months, 11% stated their markets would need 1-2 years to recover, and only 2% reported the recovery would need 3 years or more.
Retail Market Highlights
- The prospects for changing a struggling retail real estate market are not great, with 46% of survey responders stating the sector would be cold over the next six months – yet that is an improvement from spring of this year when 61% thought retail real estate would be cold over the next six months. 14% said demand for retail real estate would get hotter in the next six months.
- Other than the hospitality sector, retail real estate is suffering the worst among the property verticals. 50% of the survey responders that are knowledgeable about retail real estate and retail in general said it would take 1-2 years for their markets to recover while 22% stated recovery would require three years or more, and 12% responded that retail “would never return to pre-pandemic levels.” Only 3% said their retail markets had already recovered or would in the next five months. While most agree that vacation and business travel will recover to pre-pandemic levels eventually – and help the hospitality sector, the retail industry is clearly in the midst of a transformation and it will take a few years for retail operators to change and adapt to how people shop, and adjust their real estate requirements accordingly.
NAI Summit
naisummit.com
1620 Pond Road, Suite 150
Allentown, PA 18104
610.264.0200
About NAI Summit
NAI Summit is the Greater Lehigh Valley’s only full-service commercial/industrial real estate firm servicing Eastern Pennsylvania. Founded in 1982, NAI Summit has consistently maintained the highest volume of commercial transactions by utilizing an extensive network of professional affiliations. NAI Summit provides comprehensive services in acquisitions and disposition, leasing, representation of owners and tenants, investment sales, development, asset management, property management, facilities management, residential management, corporate services, build-to-suit leaseback management, consultation, advisory services and research. To learn more, visit www.naisummit.com.
About NAI Global
NAI Global is a leading global commercial real estate brokerage firm. NAI Global offices are leaders in their local markets and work in unison to provide clients with exceptional solutions to their commercial real estate needs. NAI Global has more than 375 offices strategically located throughout North America, Latin America and the Caribbean, Europe, Africa and Asia Pacific, with 6,000 local market professionals, managing in excess of 1.15 billion square feet of property and facilities. Annually, NAI Global completes in excess of $20 billion in commercial real estate transactions throughout the world.
Based in New York, NAI Global provides a complete range of corporate and institutional real estate services, including brokerage and leasing, property and facilities management, real estate investment and capital market services, due diligence, global supply chain and logistics consulting and related advisory services.
To learn more, visit www.naiglobal.com
Information provided to TVL by:
Staci Saeger
www.naisummit.com
