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Commercial Real Estate Recovery? 3 Things to Watch in 2021

While some of the flux and inconsistency from the impacts of COVID-19 may carry over into 2021, there is likely good news ahead. The nation’s largest commercial real estate investment group, CBRE, predicts that the economy will see strong growth in the second and third quarters this year. The commercial real estate industry may take a bit longer to show signs of recovery, but CBRE states things will likely be looking up by the end of the year.

Here are three things to keep your eyes on as we move toward spring, as they may help the commercial real estate industry recover and move toward growth.

The recent relief package passed by Congress in December 2020 included help for renters in multifamily residences and commercial properties who were having trouble making rent due to the financial impact of the pandemic, says Commercial Property Executive. These measures may help renters catch up or stay current on monthly payments, which will hopefully get more money flowing back into your business.

1. Federal Relief

Additionally, CBRE notes the new administration is hoping to pass another $1.9M in stimulus packages, including more unemployment support and direct payments to citizens. This is expected to help boost the economy and should help commercial real estate recover in the long run as well.

2. Interest Rates

The Federal Reserve is likely to keep interest rates steady for the next few years, according to CBRE. Capital markets will likely start to stabilize mid or late-year, and Commercial Property Executive says investors, who already have cash at the ready, will then be ready to go. As the economy continues to grow, CBRE notes that the demand for real estate will increase. Combined with the predicted increase in real estate investments, commercial real estate could see solid growth later in 2021.

3. A Return To Urban Properties

As the pandemic continued throughout 2020, offices shutting down and people working from home led to a shift away from urban areas. Nearly 16 million people left cities and headed to the suburbs, according to Commercial Property Executive. While some people headed to second homes, J.P. Morgan Chase says many younger workers moved back in with their families in the suburbs to save money. 

While questions remain about people continuing to work remotely, nearly 74% of respondents to a survey conducted by the Business Owners and Managers Association International said that in-person office space is still an important part of conducting business successfully. Remote work may remain at higher levels than they were prior to the pandemic, but many employees will be working in offices again as time goes on — even if it is only a few days a week. As offices open again, watch for residential renters to move back to urban areas so they can once again be closer to work.

The pandemic has certainly presented challenges, but the economy is slowly moving toward recovery. By monitoring these key areas, you’ll have a better idea of when the commercial real estate industry is poised to start growing again.

If you have questions about commercial property title services, Landtrust Title Services can help. Please contact us today at [email protected] or by phone at (312) 528-9210.

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