Covid-19 has impacted the entire world and everyone on it in some way, shape, or form. The real estate industry was no exception. Prior to the pandemic, the economy in the United States was predicted to grow significantly and all real estate classes were performing well. By March 2020 the economic shutdown first started to take a toll on the industry and situations became increasingly alarming. While the world and the real estate industry alike are still feeling the effects of the pandemic, there are a few trends within the different aspects of the real estate industry to discuss.
Travel & Hospitality Market
The travel and hospitality market is facing severe setbacks as a result of covid-19. As travel is not the safest activity for anyone to be undertaking this year, many would-be travelers have stayed home. While the industry will bounce back, as shown by previous disasters and pandemics, it will not be a profitable endeavor for the foreseeable future until the pandemic passes.
The apartment market was exceptionally strong before the pandemic. This sector of the real estate industry may be fairly safe compared to others. Rent relief and forgiveness has played a major role in keeping this industry afloat. In fact, the need for social distancing may encourage more people to rent or buy apartments in lower population density areas.
Online shopping gave the retail market its first hit, making more and more physical stores transition online or face closure. Online spending has been increasing rapidly due to the pandemic and the resulting limits in mobility. Store owners facing high rental costs could choose to operate fully online, leaving this real estate industry in limbo as to whether or not it will survive the pandemic in the form we see it in now.
The average size of a family has decreased with many couples choosing to have less or no children at all. The development side of real estate usually takes less of a hit than others as they can alter their course more easily. The development market needs to take a step back, evaluate what its consumers want and need, then adjust their plans accordingly. If developers do this, they could see high returns on their investments.
Office real estate is taking a major hit and this trend may be here to stay. With more and more businesses switching to work-from-home environments, the demand for office space is at record-low levels. Some businesses are transforming their office spaces into a social space where their employees can safely interact outside of the home, but expect low ROIs if you’re in this sector of the real estate industry.