As a Counselor of Real Estate (CRE®), I am the beneficiary of the collective wisdom of an elite group of real estate experts from around the world. Annually, we release the top ten issues affecting real estate and this year is (as one would expect) particularly nuanced.
The number one issue, unsurprisingly, is the COVID-19 pandemic and the ways in which this will impact the real estate market. “In examining real estate markets, we must consider existing fragility, adaptability to new demands, and potential relevance to new markets. Demand will be defined by the extent to which this crisis leads us to abandon old habits and adopt new ones.” We have seen this in the northeast and in North Carolina in every sector – from the already struggling retail to the variable office marketplace. And as the CREs point out, there are more questions than answers at the moment. “Real estate is a lagging indicator. With the economy expected to take a few years to recover from the effects of COVID-19, our industry will show ripples for a few more.”
Economic renewal ranked second on The Counselors’ list, with the U.S. economy showing signs of decline prior to the COVID-19 pandemic. “Significant segments of the economy remain debilitated. Leisure and hospitality, retail, air travel, and construction can expect slow and partial rebounds into 2022. Ironically, the healthcare industry—especially workers in lower-income jobs—is facing an intense financial squeeze in the wake of the coronavirus.” For these reasons and more, we all suspect this recession may take the “W” shape – a dip to follow some initial recovery.
Capital market risk rounded out the top three issues of concern for The Counselors, as the last four months have presented not only real-time volatility of the capital markets, but also confirmed how quickly debt and equity capital liquidity can stop flowing when risk and returns are difficult to measure.
The remaining seven issues identified by The Counselors of Real Estate® are Public and Private Indebtedness, Affordable Housing, Flow of People, Space Utilization, Technology and Workflow, Infrastructure, and ESG (Environmental, Social, and Governance), respectively.
While these are national and international observations, they are all applicable in the smaller northeast and North Carolina regions as well. Never in my thirty-plus year career have I seen a “macro” event have such a rapid and dramatic impact on smaller markets and industries. But this year has brought about new ways of thinking and acting that will affect choices about space, investment, spending, and most of all health. As a CRE®, I’ll be watching this carefully, quantitatively, and analytically. As a citizen of this planet, I’ll be living this alongside everyone humbly and hopefully.
To read about all the Top Ten, please visit: https://www.cre.org/topten.
By: David G. White