|As some parts of the U.S. inch cautiously toward a new normal, real estate owners and investors are beginning to absorb the shock of the COVID-19 pandemic. The economic impact is reverberating through all asset classes, and some are proving more resilient than others.
Multifamily is holding steady, with nearly 91 percent of apartment households making a full or partial payment by May 20, according to the National Multifamily Housing Council’s survey of 11.4 million units nationwide. Renters are getting relief from extra unemployment benefits, which continue through the end of July, and may be extended. Senate Majority Leader Mitch McConnell said this week that another round of economic relief is likely, but a Senate bill would be “much more narrowly focused” than the $3 trillion version passed by the House.
Industrial properties, buoyed by the growth in ecommerce, have the best outlook for occupancy and rents, according to a recent forecast by the Urban Land Institute. Data centers will see higher demand as businesses upgrade networks, modernize data platforms and shift more storage to the cloud.
In the office sector, occupiers are likely to shrink their footprints as COVID-19 accelerates the trend toward a decentralized workforce. Twitter recently told employees they could work from home indefinitely, and Facebook said it expects up to half its staff to work remotely in the next five to ten years. The shift could spark demand for suburban office space, or well-designed, safety-enhanced co-working space in urban centers. Major occupiers will likely favor green buildings offering cleaner HVAC systems, windows that open, wider-spaced workstations and robust health and safety features.