Which Commercial Property Sectors are Doing the Best During the Pandemic, and Which Ones Are Hurting?
Together with almost every other sector of the economy, commercial property has been disrupted by Coronavirus and social distancing. For many years, the main declining CRE sector has been retail. However, this sector is no longer suffering alone, since the pandemic is hurting most other CRE sectors: hospitality, office, multi-family, personal services, restaurant, entertainment, and construction.
A decline in retail space may result in greater demand for industrial space. For the industrial sector properties, demand for storage space from online stores may continue to increase after the coronavirus pandemic. The online shopping industry has created a strong demand for logistic space and warehouse, increasing record asset values and rental rates for industrial properties, while reducing demand for some retail properties.
However, it’s worth noting that some areas of retail are still doing well. Shopping centers are still open because they have supermarkets that are all trading exceptionally well. The non-discretionary retail segment will probably emerge from this crisis as one of the most resilient commercial property sectors.
The performance of commercial office buildings depends on the underlying resilience of the tenant’s business. For instance, where tenants are government departments and big multinational companies with employees working from home, the effects are likely to be minimal. However, those with tenants whose business model has been significantly disrupted by social distancing are being deeply affected.
The aftershock is likely to affect various types of commercial property differently. Shopping malls will probably take some time to return to full capacity, as people remain worried abo……
A decline in retail space may result in greater demand for industrial space. For the industrial sector properties, demand for storage space from online stores may continue to increase after the coronavirus pandemic. The online shopping industry has created a strong demand for logistic space and warehouse, increasing record asset values and rental rates for industrial properties, while reducing demand for some retail properties.
However, it’s worth noting that some areas of retail are still doing well. Shopping centers are still open because they have supermarkets that are all trading exceptionally well. The non-discretionary retail segment will probably emerge from this crisis as one of the most resilient commercial property sectors.
The performance of commercial office buildings depends on the underlying resilience of the tenant’s business. For instance, where tenants are government departments and big multinational companies with employees working from home, the effects are likely to be minimal. However, those with tenants whose business model has been significantly disrupted by social distancing are being deeply affected.
The aftershock is likely to affect various types of commercial property differently. Shopping malls will probably take some time to return to full capacity, as people remain worried abo……