The Covid-19 global pandemic left almost no industry unchanged. Post-Covid commercial real estate is no exception. Shutdowns, downsizing, social distancing, and remote working drastically shifted the industry’s landscape. Not only did the pandemic alter the need for commercial real estate space, but it also affected the way the business itself is conducted.
Commercial real estate investors and commercial tenants alike are curious to know what the CRE industry will look like as the nation cautiously transitions out of the Covid-19 climate. While the events of the pandemic hobbled the industry in some ways, in other ways, it sparked innovative flexibility.
The Future of CRE Office Space
There’s much speculation about the ability to transition employees back into the office after a year or more of remote working perks. However, many insist that the work-from-home model will peter out at least to some extent. In fact, big corporations like Google and Goldman Sachs have insisted workers return to offices as soon as practicable. Other companies are considering a hybrid approach to workspace locations, but even those entities will still require commercial office space.
To combat the downturn, Investors looking to attract commercial tenants are offering different incentives in a post-pandemic environment. No longer are they promoting gyms and social areas. They are advertising air filtration systems, spacious layouts, and other designs that promote safe working conditions. Additionally, tenants have more opportunities to request flexible lease terms and landlord concessions.
The Future of E-Commerce Warehouse Space
While commercial office space owners experienced difficulties during Covid-19, other types of investors actually saw a boost in business. Warehouses, for example, we’re already enjoying growth in the age of e-commerce. When the nation went on lockdown and the general population flocked to online retailers, e-commerce warehouse demand only increased. Granted, distributors experienced some supply chain interruption.
Although brick-and-mortar storefronts across the nation have started reopening their doors, the need for e-commerce warehouse space shows no sign of letting up. Experts anticipate that over 100 million square feet of warehouse space will need to be added each year through at least 2025 to keep up with e-commerce growth in the United States and in Europe. Along with the influx of warehouse square footage comes the advanced tech required of those warehouses. New warehouse designs are, on average, much larger than they were even a few years ago. And, the buildings must also be able to facilitate the increased demand for tech tracking and fulfillment obligations.
The Post-Pandemic Future of Brick and Mortar Retail Space
Retail space owners and tenants both struggled throughout the shutdowns and social distancing mandates brought by the Covid-19 crisis. Tenants who were forced to close their doors couldn’t pay rent, and landlords bound by eviction moratoriums were also financially hamstrung. Unfortunately, many businesses did not survive.
Still, the American entrepreneurial spirit persists, and retail store owners are making a comeback—although it looks a little different. Instead of expansive spaces, many owners are opting for micro-retail centers that offer a few hundred square feet instead of a few thousand. The commercial retail tenant looking for a micro-retail space has learned a valuable, risk-averse lesson offered by the pandemic—less can be more.
The Post-Covid Commercial Lease
The pandemic has changed the commercial leasing landscape regardless of the type of commercial real estate space offered. In sectors that saw growth, like e-commerce warehousing facilities, CRE landlords are at a competitive advantage. In addition to having no shortage of prospective tenants, they can also cast a wider net utilizing digital communication tools, like Zoom, that now regularly enables parties to connect and host virtual meetings and tours.
For other sectors making a slower comeback, like commercial office space and retail space, tenants can expect to see more concessions with an emphasis on more flexible lease terms and spaces that reduce employee density.
Post-Covid Commercial Real Estate Agent
At McBride & Caballos, we prioritize guiding each client through the process of finding the right commercial space. And, we negotiate the best lease terms possible. We work directly with our clients to provide a personal and sophisticated experience that offers a smooth leasing process. To learn how our experienced team can help you, contact McBride & Caballos Commercial Real Estate today.