A few years ago, I heard a friend say, “to see where you’re going, you need to look at where you’ve been.” 2020 is now in our rear-view mirror where it belongs, but many of its reminders are still with us each day. Wearing a mask in public is perhaps more important than carrying an ID; online education for our children has become a forced discipline, and working from home for many has become mandatory.
How will these and other Pandemic related changes impact our lives, our communities, and our local economy in 2021? How will the Triangle Region react to reduced corporate air travel, retailers who have shortened store hours, and reduced occupancy in area hotels and office buildings? In addition, what sectors might be positioned to rebound or actually thrive under the “new normal” as we embrace Social Distancing in the New Year?
As we shift our vision to the New Year, let’s look at several area sectors that tend to impact most of our lives locally:
Office Sector Losers and Winners:
- High Rise Office Towers in our Downtown corridors remain at 25% to 40% capacity on any given day, and most believe this trend will remain consistent for now.
- Experts feel the highly congested Urban Markets will be the slowest to rebound as their wounds are the deepest.
- The financial trickle-down effect from this lack of occupancy hit the Owners and Employees of the morning breakfast coffee shop and the businesses who serve lunch the hardest!
- Suburban Office Parks are winning as they experience a significant increase in activity and commitments from companies looking to plant their corporate roots in a campus-style setting. Lower profile buildings, fewer people in elevators, and onsite amenities providing fresh air and room to easily move from building to building are in high demand.
Retail and Hospitality Free Fall:
- Since April, limited seating in restaurants created fewer meals being served, and consumers preferring take out meant fewer employee hours being worked and lower wages being earned.
- Government regulations kept the fitness industry shuttered and movie theaters from showing their Summer and Holiday premiers.
- The short-term damage within the Retail sector has been tremendous and unfortunately, the long-term viability for many businesses doesn’t look better. Thankfully we’ve seen our community step up to support local merchants and recent Holiday sales were a strong boost according to several Economists.
- The Hospitality Industry may have endured the worst impact of any sector with Summer Weddings, Fall Conferences, and Christmas events being canceled and rooms going unused during the same time frames.
- Fortunately, Summer and Fall vacations were a bright light as rentals along our Coastlines and Mountains soared as families needed an escape and the offerings of time away supplemented by the unique requirements of WFH mandates meant only an internet connection is required!
- We always see one sector’s fall is another’s gain and Industrial has been THE biggest winner to date!
- Demand for “Last-Mile Delivery” of products has reached a frenzied pace and Developers can’t deliver products quick enough to meet the continued demand for large Industrial and smaller Flex-based products.
- Rental Rates for newly constructed offerings have increased more than anticipated and rates for older less efficient buildings are perhaps at an all-time high.
- Vacancy rates throughout the Triangle Region are extremely low and any building delivered in 2021 will likely be absorbed before its completion.
- If Retail markets continue to soften, the Industrial markets will continue to expand as they provide a lower-cost alternative for the online shopper.
Where We are Headed:
Last week Dr. Michael Walden, the Lead Economist for NC State, mentioned in his Annual Economic Forecast that he felt future decisions on where we live and work will no longer be based on proximity to schools, ease of access to shopping areas, or even the time it takes to commute to the office. These elements of our daily life have shifted to Amazon delivery, online learning, and a reduction of time at our desk in the office. Dr. Walden also mentioned he felt the Triangle Region was poised for a strong recovery in the year ahead. Our residential Real Estate markets are thriving and are being complemented by low Mortgage rates. These trends are expected to remain constant throughout the New Year which is good for our entire Region!
Commercial Real Estate trends typically follow the Residential market and with a vaccine beginning to roll out the road ahead for 2021 seems a bit smoother. We’ve all got to embrace our individual and collective roles in the New Year and pessimism should be replaced with optimism. Our ability to encourage one another, our unwavering determination to protect our families and colleagues from a continued spread of the virus will provide the needed shot in the arm any medical injection can’t cure.
John is well-respected for his unparalleled professional track record and high ethical standards. As a 26-year veteran in the local commercial real estate landscape, John has built a solid foundation of success by providing timely strategic solutions to entrepreneurial, national, and international clients. Leasing, owning, and developing commercial real estate is a very complicated endeavor and John provides competent representation to make certain an informed business decision is made. Honesty, professionalism, and attention to detail are John’s highest priorities. His knowledge of the Triangle Region, reputation for getting the ‘right deal done’ and his desire to provide long term benefit makes him stand out in a crowded industry.