2021 Global Real Estate Market Outlook
Albuquerque, NM 2/1/2021 – NAI Maestas & Ward announced the release of the NAI Global Real Estate Market Outlook for 2021.
The report is the result of an internal survey of NAI Global brokers from over 30 U.S. states and a dozen international offices with responses between October 7 and October 29, 2020.
The clear takeaways from the recent NAI Global Real Estate Outlook survey, especially in the context of survey responses from six months earlier, is that NAI Global real estate professionals have largely adjusted to living and working during the pandemic. Whether it is called concern, deeply concerned or fear, we’ve seen what high unemployment looks like and feel less threatened by it. The oil and gas industry is in a deep recession, yet only 1% of survey participants think it is a major factor in our economy. The Coronavirus is a terrible blow to our economy and way of life, yet the perception of its impacts—while still bad at 32%, is becoming more manageable. Or simply, we have grown accustomed to it. Work from home (WFH) was a novel experiment in 2020, and we still don’t know how, exactly, companies will adjust business operations once we get to a relatively safe post-pandemic period. However with the same level of response for concern – just 6%, it seems to suggest that WFH is not that big of a deal—at least for the real estate market. We’re not calling this “the new normal” yet because we are certainly not there, and probably will not be any time soon.
The survey also revealed what has been said before – that the recovery from the pandemic is taking shape at different speeds and is not at all consistent geographically. In other words, it is better in some markets and worse in others.
Office Market Highlights
Over the next six months, 59% said the office market would be flat, 18% thought it would heat up yet 8% responded that office markets would cool. By comparison, the spring survey (published in summer), 9% said tenant demand would be hot, 25% said it would be cold and similarly regarding office market conditions overall, six months ago 15% of NAI office brokers thought the market would heat up while 13% projected the office market would cool down. In other words, by fall of this year and compared with six months earlier, the outlook for office market conditions was less pessimistic and was perceived to be more stabilized with potential for greater improvement next year.
Even if there is a whiff of optimism for the office market, recovery from the pandemic will take another 1-2 years, according to the majority, 53%, while 23% think the recovery will happen in the next 6-11 months and 16% reported it would take over three years. 4% projected the recovery is closer at hand, or 1-5 months away, while the same percentage – 4% said “it will never return to pre-pandemic levels.”
Industrial Market Highlights
As spring turned to summer and then fall, it became clear that the industrial real estate sector was the strongest among the property verticals. That perception was fully endorsed by NAI Global professionals in the October survey, with 78% of them stating the market for industrial real estate was hot. 20% of responders said it was flat in their respective markets while only 2% said it was cold.
A majority – 54%, said their industrial markets had already recovered since the onset of the pandemic, while 11% said recovery would require another 1-5 months, 23% thought recovery would take 6-11 months, 11% stated their markets would need 1-2 years to recover, and only 2% reported the recovery would need 3 years or more.
Retail Market Highlights
The prospects for changing a struggling retail real estate market are not great, with 46% of survey responders stating the sector would be cold over the next six months – yet that is an improvement from spring of this year when 61% thought retail real estate would be cold over the next six months. 14% said demand for retail real estate would get hotter in the next six months.
Other than the hospitality sector, retail real estate is suffering the worst among the property verticals. 50% of the survey responders that are knowledgeable about retail real estate and retail in general said it would take 1-2 years for their markets to recover while 22% stated recovery would require three years or more, and 12% responded that retail “would never return to pre-pandemic levels.” Only 3% said their retail markets had already recovered or would in the next five months. While most agree that vacation and business travel will recover to pre-pandemic levels eventually – and help the hospitality sector, the retail industry is clearly in the midst of a transformation and it will take a few years for retail operators to change and adapt to how people shop, and adjust their real estate requirements accordingly.
Contact us for more information regarding the New Mexico Commercial Real Estate market.
Martha Carpenter is an NAI Maestas & Ward commercial Director specializing in the leasing acquisition and disposition of single and multi-tenant office/assisted living/medical/industrial/retail and land properties for local and national clients. Learn more about Martha and her listings.
NAI Maestas & Ward is a full-service commercial real estate company serving New Mexico since 1996. The company is a dynamic commercial real estate firm offering best-in-class real estate services in brokerage, property management, asset management, business brokerage and development services.