What should you expect for commercial real estate in 2022?
Marilee Utter, chair of the Counselors of Real Estate, provided answers to that crucial question on Tuesday at the National Association of Real Estate Editors’ annual conference in Miami.
In a wide-ranging session moderated by Catie Dixon of Bisnow, Utter—who also serves as president of Citiventure Associates, a Denver-based consulting firm—highlighted 10 topics that demand the industry’s attention:
Bifurcation of capital markets. “There are clear winners and losers,” Utter said. “The areas that will do well consist of industrial, multifamily, life science and retail. The areas that will not include office, malls, hospitality and some CBDs.”
- Adaptive reuse. Unlike in the past, however, this trend will focus on big-box stores and malls, freeing up larger parcels of land for redevelopment.
- Structural economic change. According to Utter, pandemic uncertainty raises real estate investment risk.
- Political polarization. “It is worse than we’ve seen in our lifetimes,” Utter said. “The implications (for) real estate have been profound.”
- Housing supply and affordability. Right now, there is a “crisis for all non-luxury housing.” Workforce housing will present a major opportunity.
- Infrastructure. New imperatives are emerging, and developers are flocking to areas that receive funding for projects.
- Logistics. Many older warehouses and retail centers will be considered obsolete.
- ESG. “It’s an older idea, but its time has come,” said Utter, predicting that climate change and ESG will shape decisions for most companies.
- Technology acceleration. Things are changing rapidly. Building health and wellness amenities will be the minimum standard for top lessors.
- Remote work. According to Utter, hybrid office setups are here to stay, which means that office space demand will be permanently lower.