OFFICE SECTOR SEES ASKING RENTS , VACANCIES RISE

CANNABIS PROVES POPULAR CANDIDATE IN 2020 ELECTION

GROCERS ’ GROWTH COULD PLATEAU IN NEXT DECADE

LODGING CMBS DELINQUENCIES DECLINE AFTER PAINFUL SUMMER

Econ 101 teaches that prices should drop as supply increases . But when it comes to 2020 , little if anything can be understood as normal . The office sector , according to a 3Q2020 report from Cushman & Wakefield , saw asking rents increase while vacancies also increased as the U . S . settled into its months-long fight against COVID-19 .

The national vacancy rate hit 14.4 percent in 3Q2020 , the highest level since 3Q2014 . Meanwhile , net absorption was -41.3 million sf , an increase from -23 million sf in 2Q2020 and the largest decline in occupancy in the 25 years since Cushman & Wakefield began collecting data . Despite these troublesome data points , asking rents increased to $ 34.64 per sf in 3Q2020 , an increase of 1.9 percent from the previous quarter . While counterintuitive , this increase is a sign that landlords are maintaining or increasing asking rents despite the difficult market conditions .

One of the biggest winners of the 2020 election may have flown under your radar : cannabis . South Dakota , Montana , New Jersey , and Arizona all voted to legalize the use and / or sale of recreational cannabis . At the start of 2021 , 15 states and Washington , D . C ., have fully legalized marijuana .

Though the national trend continues toward increased cannabis production and sale , local markets can take time to establish themselves , with challenges ranging from identifying and acquiring viable real estate to passing regulations and dealing with licensing issues .

But cannabis is a growing niche in land real estate . In November , Subversive Real Estate Acquisition REIT became the second publicly traded cannabis REIT , after California ’ s Innovative Industrial Properties .

COVID-19 has split the retail market in ( at least ) two sectors , with grocers , convenience stores , and pharmacies doing well , while clothing stores and restaurants are among the businesses struggling to stay afloat . But gains made by grocers may face decreasing demand as consumer behavior reacts to economic reopening of businesses in 2021 , according to a November 2020 report from Bain & Company .

Sales in 2020 at grocery stores in the U . S . jumped by 10 percent , though analysts expect steady revenues in 2021 with moderate forecasts ranging from 1 percent increase to 3 percent decline . The Bain team suggests grocers who act to capture and maintain market share will be best positioned for success in the coming decade , emphasizing improvements in e-commerce , supply chain efficiencies , and improved customer in-store experiences .

The good news is that the delinquency rate for commercial mortgage-backed securities continued to decline in August after hitting a peak in June . The bad news ? It remained at 22.96 percent — a level that was inconceivable in February 2020 , when it was just 1.6 percent before the coronavirus thrashed the hospitality sector . According to Trepp , the overall delinquency rate dipped to 9.02 percent in August after reaching a peak of 10.32 percent in June .

Lodging remains the sector with the largest portion of its CMBS loans in delinquency , with retail as the second-most troubled market at 14.88 percent delinquency . Analysts suspect a bump in delinquency rates across market types could be in the future , considering dwindling federal relief and increasing COVID-19 rates across the country , but any increases in troublesome loans should be relatively modest compared to rates at the beginning of the pandemic .

This page , left to right : Nicholas Kostin , David Trood , FG Trade , Mustafagull