Commercial Real Estate Future?

Before the pandemic commercial real estate was shifting away from department stores and the usual retail spaces. The life-changing retail apocalypse came at the behest of Amazon, Walmart, Target and other retailers who saw the future of on-line shopping. Thanks to Peapod, a business model for on-line grocery shopping was launched.


With the pandemic we all learned how to buy groceries, clothing and personal items on-line. Simple and competitively priced. Free shipping helped assuage other doubts. We were hooked as a nation.


That’s game changing for retail business and its use of space. It will be much different in coming years as retailers dump brick and mortar stores. Amazon taught us how to adapt to e-commerce years ago when it sold books on-line.


With the pandemic, social distancing and face masks – along with the fear of contracting a virus – pushed us into the on-line shopping experience.


So did working from home. Employers learned staff could work from home and not suffer lower productivity. In fact, new team behaviors developed unbidden and collaborative work skills strengthened. Employers next saw their physical plant maintenance bills shrink. Next they wondered about capital costs of maintaining and owning facilities, the debt, overhead costs, and all the rest.


Physical plant also involves site selection, downtown versus suburban, or commercial versus industrial. Suddenly they saw a future without huge investments in buildings. With it they envisioned staff happy to avoid long commutes and related costs.


With continued worries over health and safety of staff, work from home protocols are likely to be extended and many made permanent. And with those decisions, Bang! goes the demand for commercial real estate.


The next question will become: what will become of central city downtown commercial districts? Will people still want to locate in city downtowns convenient to restaurants, theaters, museums, and so much more? Jobs? Maybe not.


And with social distancing, restaurants, theaters, libraries and museums are likely to rethink their locations as well. So, maybe people won’t be attracted to downtown housing after all.


The next question is: How will the vacant spaces be absorbed in the real estate market? Will these buildings become a drag on the market? Will they be repurposed? And if so, when will these new uses be found and implemented?


Change. Lots of change. Not just because of the pandemic, either. Change because it is a constant in our lives. Those who anticipate it, adapt to it easier. And healthier!


We will be watching developments in this arena.


May 24, 2020