How COVID-19 Changed the Landscape of Real Estate

Updated on September 1, 2021
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It is an understatement to say that the COVID-19 global crisis upended every area of our lives, as well as every sector of society. It changed the world of business, as well as the healthcare and pharmaceutical industries. The pandemic didn’t just change our world at a macro level; it also affected us in an individual capacity, with many families having to do everything—from their jobs to schoolwork—from the comforts of their homes.

The COVID-19 crisis changed every sector of society, the world of real estate, perhaps most of all. Here are some ways the pandemic changed the sentiments and behaviors of real estate investors and the industry as a whole.

Offices and commercial properties

With the delta variant making COVID-19 cases rise in many parts of the United States, many companies decided to push back their plans to return to the office. Many offices remain unoccupied due to rising cases of the delta variant.

For this reason, experts predicted that many commercial estate investors will continue to hold off on making big moves and will reconsider all their capital decisions. Since the world is still dealing with extreme uncertainty even a year and a half into the pandemic, many investors hold their assets through the downturn.

However, we might still see the light at the end of the tunnel. Early 2021 predictions claimed that there would be an upturn in commercial real estate in the second half of the year, and thanks to the vaccine rollout and the economy opening up again, many landlords could still collect fees. Many companies were able to navigate the issue of rental fees.

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Prioritizing sustainability

Experts say that if real estate investors want to find success in the future, they need to focus on and prioritize property sustainability. One of the biggest changes that the pandemic is bringing to our lives is the rise of consciousness around environmental care and stewardship and prioritizing overall health and well-being.

This is not just a trend in the U.S.—the whole world is moving towards this mindset, which is why sustainability initiatives need to be a top priority not just for businesses but also for national and local governments.

Developers are also moving towards sustainability—a trend that was already seeing an uptick even before the pandemic happened, so real estate investors will most likely be more drawn to properties that boast of eco-efficient practices, from responsible and ethical land acquisition to opting for green building designs and sustainable construction.

The demand for multifamily properties rose and remains strong, thanks to a host of reasons that include:

  • Baby boomers who are choosing to downsize from luxury rentals to smaller properties,
  • Millennials who are financially unable to purchase their own homes due to student loans and other types of debt, and
  • Generation Z now entering the housing market and, like generations before them, are doing it through renting.

For these reasons and other pandemic-driven trends, residential property investors might fix their eyes on multifamily properties. Doing so might be more expensive, but investing in a multifamily property might be easier to finance, and banks might be more inclined to approve loans for them since they tend to generate stronger cash flows every month.

Moreover, these developments usually boast in-demand features like open green spaces and many options for entertainment. Developers are also keen on adding higher-tech amenities and appliance upgrades like energy-efficient HVAC systems as well as state-of-the-art thermostats. Developers also often partner with sponsors that can add value to the properties, making these multi-property structures more attractive to tenants and, therefore, to investors.

Effects on retail property investments

In a time like the COVID-19 crisis, shopping in a brick-and-mortar store has become a sensory experience that most consumers would desire. The same can be said for dining in or having coffee in a physical cafe. While as many as 110,000 restaurants and bars shut their doors for good due to pandemic-mandated closures, there will always be a demand for physical retail, no matter how minimal. For now, however, shopping centers will grab this opportunity to lease their spaces to non-retail tenants like physician and dental clinics. 

The COVID-19 global crisis has changed our world and will continue to do so in the next year and beyond. As government mandates and guidelines change, so will the demand for real estate, so investors need to keep an eye out for trends if they want to get ahead of the curve.

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The Editorial Team at Healthcare Business Today is made up of skilled healthcare writers and experts, led by our managing editor, Daniel Casciato, who has over 25 years of experience in healthcare writing. Since 1998, we have produced compelling and informative content for numerous publications, establishing ourselves as a trusted resource for health and wellness information. We offer readers access to fresh health, medicine, science, and technology developments and the latest in patient news, emphasizing how these developments affect our lives.