Jeff Geiger authored the August 24, 2020 post on the NAIOP Market Share blog addressing the trends that continue to mark the commercial development market despite changes in nearly every other aspect of life in recent months. While how we work, shop and dine out are changing, the long-term fundamentals that drive real estate development and investment remain unchanged.
“Contrary to popular headlines, office space will remain in demand,” Geiger said. “Yes, employees will want more flexibility, and yes, employers will need to rethink how they use their space. But, office developers and owners were adjusting to flexible work environments after the Great Recession and will continue to do so successfully.” Geiger adds that office space will remain in demand because of the benefits it offers, including structure, culture, comradery and mentorship employees seek – especially in the millennial and Gen Z workforce.
Turning to the retail sector, Geiger observes that the industry’s evolution hasn’t changed, just accelerated. Successful retail will continue to implement uses that cannot be replicated online, including auto-centric and experimental uses. Experimental uses will thrive again once we can return to our natural social selves, and additionally, new ingenuity and creativity will drive even new ways for brands to occupy retail spaces in ways we cannot anticipate today.
Multifamily living properties will remain in demand due in large part to economic challenges on Gen Zers and millennials that prevent their ability to afford single family residences and to begin accumulating the wealth to do so in the near future. Greater density in mixed use properties drive down the cost a buyer must absorb, and they provide additional cost-saving benefits of nearby employment centers and minimized daily expenses through pedestrian activity.
“By continuing to pursue mixed-use projects, real estate developers and investors will continue to provide the living environment that the millennials and Gen Z will seek with the resources available to them,” Geiger said. “They will also capture demand from empty-nester boomers who want to downsize.”
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