Some trends are already appearing in how COVID-19 has impacted real estate decisions. The economy is going to recover at some point, so some trends are likely to be temporary. However, there will certainly also be long-term impacts as experiencing the pandemic has altered people’s outlook on approaching real estate decisions, and even decisions made for the here and now could have lasting effects.
The less permanent changes include fiscal troubles at the state and local levels as revenue from commercial real estate taxes drops, retail vacancies, and a drop in urban desirability, expected to be temporary because of urban districts’ importance in certain industries once job recovery is underway. With this drop in urban desirability comes people wanting affordable suburban housing. This is being achieved now by many people moving to the Southern US, which already features low-cost suburban housing.
In the long term, however, we expect plenty of attention to enabling more affordable housing through government action and zoning changes, as well as programs to help traditionally low-income groups, such as minorities, get into the real estate game. These programs would be a direct response to COVID-19, but with lasting impacts. Another such change is greater attention to health and safety within the technological infrastructure of commercial buildings such as hotels and restaurants, which need not be eliminated post-pandemic. But there’s also a major change that was brought about by the pandemic, but addresses a different issue entirely, and that is office size. The prediction is that companies will want more, smaller offices, in more spread-out locations. This is because companies recognize both the feasibility of remote work and also the importance of office space for coworker cohesion and training. Their solution is small offices where a few coworkers can reliably meet up regardless of where they live while they aren’t working at home.