ECONOMIC OUTLOOK
Rising Home Prices , Industrial Properties in Demand in 2021
Amidst uncertainty , resiliency and collaboration will be vital .
By CIANJ Chairman William C . Hanson , SIOR , President , NAI James E . Hanson
Before the emergence
of COVID‐19 , the phrase “ live-workplay ” was used extensively to describe how our local economies were being constructed around the 24-hour needs and wants of prospective residents and workers . This same lens provides a valuable context for how we can analyze the impact of the COVID‐19 pandemic on the strength of our economy over the short- and long-term .
Last year , we saw thousands of businesses close nationally , even though the Paycheck Protection Program ( PPP ) and rent deferrals were in place for much of that period . The two sectors that have felt the immediate economic impact of the pandemic have been retail and hospitality , which make up much of what we would define as “ play ” in our threepart analysis .
According to the National Restaurant Association , more than 100,000 restaurants have closed permanently or for the long-term . In New Jersey , our prolonged shutdown placed even further stress on the retail and hospitality industries and the winter months will force an industry based on thin margins to face an impossible financial picture . Similarly , the national hospitality industry has faced its worst year on record , with a 50 percent revenue decline and a 38 percent vacancy rate nationally .
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New Jersey ’ s deep hospitality sector and reliance on virtually non-existent business travel portend difficulty ahead . With the continued lack of consumer confidence in the market , I do not expect the traditional retail and hospitality sectors to bounce back until well into 2021 or 2022 .
With the halting of traditional retail activity , the e-commerce sector has emerged even stronger than it was previously . Data from IBM ’ s U . S . Retail Index has shown that the pandemic has accelerated the shift away from physical stores to digital shopping by roughly five years . Coupled
Our business community has shown tremendous resilience in the face of what has been an unpredictable and constantly shifting economic picture .
with this , the shocks seen in our supply chain earlier in the pandemic showcased the fragility of our international shipping networks . I fully expect to see a move toward adding resiliency and redundancy into our supply networks , as well as a move to re-shore some manufacturing capacity . These two trends working in tandem will superheat what was already a red-hot industrial market .
The two other components , “ live ” and “ work ,” continue to be more difficult to nail down with a level of confidence . Before COVID‐19 , while
With the halting of traditional retail activity , the e-commerce sector has emerged even stronger than it was previously .
With more people working from home , living spaces change to accommodate work space .
they played in tandem , they were separate entities . With the sudden enforcement of workfrom-home policies to slow and control the virus , they have become intertwined and , in many cases , our homes are now also our offices .
Left without much of a choice , many workers have been quick to adapt to this new way of working and living ; however , in a state like New Jersey with a large stock of office space , the sudden drying up of office demand stemming from the widespread adoption of work-from-home could have significant ripple effects for our local economies and municipal coffers .
Fortunately , New Jersey ’ s standing as a suburban island in between the density of New York City and Philadelphia helps to damper the pessimism that could be on the horizon for the office sector . While there is a broader shift to work-from-home , I do expect to see companies look to maintain physical locations near their workforces , in what is being called the hub
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