From remote-work directives to shutdowns and travel restrictions, 2020 was a tough year for the commercial real estate market. According to Kiplinger, real estate investment trusts (REITs) experienced a 2% loss. Even high-performing REITs in the industrial and self-storage sectors only delivered 9% and 10% returns.
Commercial real estate trends in 2021
But as the vaccination rollout continues, many states are easing restrictions. Commercial real estate is anticipated to recover in 2021 creating new opportunities for investors. Here are several commercial real estate trends to watch.
Data centers and communication infrastructure will continue to perform
Fueled by the accelerated adoption of digital technologies during the pandemic, data center REITs experienced a surge in 2020. As consumers and businesses drive demand for cloud and mobile technologies, America’s infrastructure has kept pace with investment in data centers, fiber networks, and other technology infrastructure.
In 2020, infrastructure returns were up more than 7%. It’s a trend that is happening across the globe. Last year, data center investment trusts were the highest-performing REITs and the sector is primed for further growth in 2021.
E-commerce drives demand for CRE leases
E-commerce was already experiencing growth, but it experienced a huge lift due to the pandemic.
To keep pace, retailers and logistics companies are scaling and optimizing their fulfillment centers. As brands look to ensure adequate inventory levels, demand for commercial real estate (CRE) such as warehouse leases will increase. This will create opportunities for owners and investors looking to tap into the CRE leasing market.
Affordable housing will attract investors
With the economic downturn, demand for affordable housing has never been greater. At the same time, developers are rethinking how these properties are built while decreasing construction costs. Modular housing design, mixed tenant models, and public-private partnerships can help preserve affordable housing and drive investment opportunities.
The healthcare sector is still one to watch
While our healthcare system experienced massive strain last year, our reliance on the services provided by those in the industry demonstrates just how critical a role healthcare plays in our society. Consequently, employment in this sector rebounded more rapidly than other markets and offices and facilities remained in demand.
Early successes in vaccination programs have also buoyed other healthcare REITs, such as long-term care and senior housing facilities.
Healthcare real estate investments still pose risks, but the sector has fared better than other industries. And, as the senior population continues to grow, these facilities will experience increasing demand this year and beyond.
CT can help you capitalize on these trends
Whether at the beginning stages of due diligence or the high-pressure stages of closing, learn how CT can provide the assistance that Real Estate Investment Trusts and Private Equity Real Estate Funds count on. Contact your CT representative or call 844-701-2064 (toll-free U.S.).