WHAT A DIFFERENCE 6 MONTHS MAKE
a booming leisure travel sector . But the hotel sector is a bit bifurcated because business travel is still lagging . Questions remain whether conventions , meetings , and trade shows will return and when . The lag in business-related travel will persist in 2H2021 . restaurant sites . Increased demand means a McDonald ’ s or Taco Bell can ’ t make it on a single drive-thru lane . They need to look at sites that are more than one-acre in size . This change is a major opportunity for commercial real estate professionals to help these businesses replace sites that are functionally and economically out of date . Dust off your skills with Site To Do Business to perform site selection analyses for national chain restaurants . Do you know where “ leakage ” is occurring in your Site To Do Business Community Profiles ?
U . S . Federal Reserve Balance Sheet ( Total Assets )
$ 8
Amount in Trillion U . S . Dollars
$ 6
$ 4
$ 2
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Source : U . S . Federal Reserve
similar to those of the pre-COVID-19 era . Inflation is everywhere , and it won ’ t abate in the next two to four quarters .
KEY CRE SECTORS While we wait and see how remote work will change expectations for the office sector , urban , high-density office assets are going to face distress in the coming two or three years because businesses and individuals learned to remain productive while working remotely . This transition could lead businesses to open satellite offices in suburbs while reducing downtown office footprints . Additionally , secondary cities like Nashville , Tenn ., and Salt Lake City could benefit from companies hiring labor in markets outside New York , Los Angeles , and San Francisco .
If the demand for office in primary markets declines , other sectors could be affected as workers look to live in suburban or secondary city locations with a more beneficial cost of living . These trends will then impact retail , multifamily , and other markets .
An early beneficiary of the reopening economy was the hospitality industry . Hotels , rental car outlets , and airlines have welcomed
Specifically for retail , the e-commerce boom isn ’ t going away . As many big-box stores are closing , for example , these sites are becoming e-commerce warehouses in some cases . Retail bankruptcies will continue , but companies like Walmart 1000, Home Depot , and similar brands could do exceptionally well in the post-COVID-19 economy if they can figure out a buy-online-and-pickup-in-store model that can compete 800 against Amazon without requiring rezoning to repurpose dedicated parking .
Restaurants 600 will also see lasting changes . For dine-in locations , what will the shift to outdoor dining mean in the coming years ? Many people realized this option was pleasant — and not just because 400of social distancing guidelines . Delivery and take-out are two other variables that could remain larger portions of a restaurant ’ s revenue 200, which could reduce the importance of inside dining space . Will the Chick-Fil-A model mean that thousands of Yum Brand restaurants close and relocate to larger 1.5- to-2-acre sites
0 that can accommodate multiple drive-thru lanes ? For casual dining , we could see a massive redevelopment opportunity for legacy half-acre to one-acre
READING TEA LEAVES The impact of COVID-19 will continue to be felt for years to come . For CRE professionals , this tumult can also be an opportunity . CRE professionals focused on the office sector may be called upon by tenants and office property owners to transition their office needs from one centralized site to various locations . Retail will continue to change and evolve to adapt to the transition from a shop-and-takehome economy to an order-online-anddeliver-to-me economy . And with respect to multifamily , we just don ’ t yet know what we don ’ t know until the rent forbearance and stimulus programs end . Like office , the opportunity in multifamily is likely in the suburbs and secondary MSAs where the remote workforce will settle out . Analyzing markets to answer these burgeoning issues are among the opportunities for industry pros to position themselves as essential advisers to existing and new clients in 2H2021 and 2022 .
K . C . Conway , CCIM , MAI , CRE CCIM Institute ’ s chief economist
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