Real estate investments can depend on various factors as they deal with many types of business. With all industries, there is a time and place for success. Being able to tell when that time comes is the greatest talent that an investor in real estate can have.
The pandemic’s effects are now in their second year. Like last year, it remains the most significant factor for the current forecasts. Many stages have occurred in how lockdowns have affected markets, and they all seem hard to read.
Though much is unknown, some conclusions can help guide us now. With that in mind, these are some major considerations for commercial real estate in 2022:
The Effects of a Pandemic
At the start of the pandemic, the real estate market was devastated. Mass shutdowns, quarantine, financial woes, and more dealt a considerable blow to the market. In 2021, wise investors swept in as properties became available at lower rates. Thus, 2021 held a good amount of re-openings and low-interest payments.
As we round the bases and enter our third year of impact, what can real estate investors think about in 2022? Here are a few of the critical things to remember this year:
- Variants – Variants are unpredictable. As new variants pop up, the risk will always exist for further lockdowns.
- Travel – While many are returning to leisure and business travel, it is still not back to pre-pandemic levels. As the situation evolves, it may worsen still.
- Working remote – Many offices have yet to reopen since closing their doors in 2020. With the pandemic still raging, this may not happen this year either.
These are only the challenges that businesses are facing. The last two years have shown us that they are not insurmountable. Some markets are even emerging ahead of where they were before the pandemic.
As businesses begin to set sights on the commercial real estate market next year, there are a few verticals to consider. Despite the challenges of the pandemic, 2022 does present a brighter year ahead.
Multi-family, industrial, and office space are all dropping in vacancies. Some of these are even dropping to their pre-pandemic levels. When setting sights on 2022, these are the sectors that are worth keeping an eye on for commercial real estate:
With the many impacts to travel, the hospitality industry has been one of the hardest hit by Coronavirus. Occupancy and RevPAR (revenue per available room) is likely to remain low this year. Income may have improved over the last two years, but the hotel industry still requires rebuilding.
Offices have been steadily reopening since the rollout of the vaccine. While the future of office space is still in a grey area, 2022 is likely to see fewer vacancies in office buildings. This rate may not return to pre-pandemic levels, but the trend is moving back upwards.
Multifamily commercial properties are set to experience a positive year of return. When quarantine first hit, these properties were significantly affected due to many people moving out of the city. As offices and businesses begin to reopen, people are starting to move back from the suburbs.
Some areas are set to see better growth than pre-pandemic levels. For larger, more affected cities like New York or Los Angeles, healing may take much longer.
Logistical properties have always been in high demand. Warehouses, storehouses, and management facilities keep companies operational. When the pandemic hit, many began looking online for their needs instead of in stores.
In addition to various storehouse facilities, cryptocurrency and virtual demand also affect these. Bitcoin mining, cloud storage, and content providers need storehouses for their servers.
As a result of these major changes, there’s more of a need than ever for these types of properties.
Investors have always encouraged buying real estate, but it’s not cut-and-dry. Real estate is one of the most critical investments that individuals or corporations can make. Setting your company up in the right piece of property is often the difference between success and failure.
Luckily, companies like Quadrate are here to help you get set up in the location you deserve! We are a building company committed to building the industry’s finest industrial/commercial facilities.