LONDON (Within The Law) - The Pandemic is set to weigh heavily on the commercial real estate, according to a report from law firm DLA Piper. However, an optimistic outlook in certain key areas drives the sector forward. According to 2020 State of the Commercial Real Estate Market survey, uncertainty created by the pandemic means a bearish outlook for the commercial real estate market for the next 12 months.
DLA Piper’s report detected a marked change of mood from 2019 which half of respondents felt moderately bullish about the future.
This year, 59% expect tough times for the next 12 months at least. The spectre of COVID 19 hangs heavily on the sector with over 40% of people believing a second wave will have a negative impact on the economy.
However, in the longer term, most are still optimistic. The majority of experts expect to see a return to pre COVID 19 levels within two years.
“One of the interesting trends we’ve seen emerge from COVID-19 is that some investors are moving away from larger metropolitan areas,” says Sullivan. “This year’s survey indicates that smaller cities with affordable suburbs are more attractive to many investors, companies and people. There has always been demand in these cities, but COVID-19 has likely accelerated that trend and may drive a new wave of investment.”
Uncertainty and opportunity
However, there is some positive news. Since the report’s publication the prospects of a vaccine have moved a step closer with positive news from Pfizer’s trials which report a 90% success rate. This, according to 76% of respondents, would have the greatest impact on the future direction of the market.
“There is consensus among CRE experts that the development of a COVID-19 vaccine will impact the CRE industry as well as a general expectation of a global economic recovery,” adds Sullivan. “Given these findings, I’m confident that with a strategic focus on CRE solutions that support a COVID-19 recovery – logistics and warehouse, investment in smaller cities and healthy workplaces for example – the industry will return to growth. There certainly are hurdles, but there is a path towards a future recovery.”
(Written by Tom Cropper, Edited by Klaudia Fior)