It’s likely a fool’s errand to try to wrap all the complexities, shifts, challenges and surprises of 2020 into a meaningful summary. However, throughout the year, our team did uncover and analyze major trends and key learnings that emerged for the real estate industry. In many cases, we did it working alongside our partners and clients. While other shifts may emerge or become more prominent down the road, a little over a year into a global pandemic, we offer 10 learnings we expect to have a far-reaching impact for years to come.
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With no precedent for how to navigate a global pandemic, Cushman & Wakefield has been out in front since day one, providing clients with the information they need to react, respond and recover.
As 2020 progressed, our Pandemic to Performance series brought forward unique evidence into what the future of the office would look like as well as its overall purpose. And through our partnerships with organizations like The George Washington University—and through millions of datapoints examined through our proprietary Experience per SF (XSF)—we developed meaningful insights to help our clients prepare for what’s now and what’s next.
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Global Office Impact Study
and Recovery Timing
Purpose of Place: History
and Future of the Office
of the Future
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COVID-19’s impact on property was highly uneven
The pandemic accelerated trends that were already in the making
The future of office looks bumpy but bright
Asia Pacific will lead the office demand recovery
The hybrid model is emerging as the optimal model for most
For capital markets, this recession-recovery looks nothing like the GFC
A new workplace ecosystem will emerge to support shifting priorities
A shifting purpose means changing space
Five dynamics will drive work culture and workplace environments
Five priorities should be factored into strategic real estate and workforce
Economist Global Research
Head of Occupier Insights
Head of Business Development
EMEA & Global Futurist
Head of Economic
Analysis & Forecasting
Industrial & logistics
Depending on the property sector, the geography, the virus’s trajectory, the policy response, we observed a mix of strong performance in certain sectors, weak performance in others, and varying degrees in between.
The stay-at-home restrictions condensed several years of online sales penetration into 2020 and accelerated other trends such as remote working, streaming services, and data consumption. Certain property sectors and geographies benefitted from these shifts
(e.g., industrial logistics, data centers, lower cost markets and suburban real estate).
The combination of cyclical impacts (e.g., job losses) and structural impacts (e.g., remote working penetration) dealt a severe blow to supply/demand metrics in 2020. But numerous studies conclude that office will remain an important part of organizations structure and strategy post-COVID.
2021 will be the year of sorting out the impact of remote working on occupancy needs. Expect a more agile work approach requiring a smaller footprint. However, after a year of retrenching, occupiers will start to make longer term commitments and the volume of leasing activity will pick up materially in the second half of 2021.
In certain parts of the region, where the virus has been more contained, office space absorption has already turned positive since the second half of 2020. Although every region of the world is different, this is at least one data point indicating that when the virus becomes less threatening, the office sector will rebound.
Numerous surveys studies conducted in 2020 and in early-2021 indicate that most companies are not moving to a 100% remote model. Although there is no consensus on the optimal balance of remote vs. in the office, most surveys show that the majority of employees expect to spend 2-4 days in the office post-COVID. Their employers expect the same.
Unlike the Great Financial Crisis, when global sales volume and values plunged and remained at low levels for two straight years, in this cycle, the capital markets have already begun to rebound. Sales volumes have generally been improving since May of 2020 and pricing for high quality assets is generally holding firm.
The office faces headwinds but it will recover.
Bringing people together and empowering them to create new ideas, products and relationships is the purpose of place. Because the emphasis of the office will likely be for collaboration, connectivity, socializing, innovation—activities that are difficult to support through remote work—office space will change to reflect this shift.
In a post-pandemic environment, employers will offer a variety of locations and experiences to support convenience, functionality and wellbeing—and the focus will be on seamlessly bringing the various work locations together.
This sector entered 2020 already strong. While it was certainly challenged in some ways by the pandemic, in many other ways, the pandemic supercharged it. The momentum is only expected to continue.
Industrial and logistics stay in overdrive.
If data is the new oil, then data centers are the refineries. Demand remains high with little sign of slowing anytime soon.
Data centers remain in demand.
1. Productivity—determining where people are best able to deliver their best output.
2. Innovation and creativity—
bringing people together in the right environment to support new ideas and breakthrough thinking.
3. Company culture and branding— supporting and sustaining work culture through the physical workplace and the ways in which people interact with it.
4. Employee satisfaction and retention— embracing flexibility and engendering trust to drive employee retention.
5. Location and building strategy— understanding that cities remain important, supporting hubs offer flexibility, and building location as
well as layout and purpose are critical.
Short-term pain eases into a healthy long-term gain. Housing cannot go virtual and various markets globally have maintained positive metrics throughout the crisis.
Multifamily brings multi-options.
1. Shifting to a greater emphasis on flexibility. For example, taking more space or temporarily reducing space, as needed.
2. Preparing for a different type of workplace. It’s no longer just about rows of desks—it’s about space as an enabler. What is the optimal configuration?
3. Finding the right balance. It’s not just about giving employees flexibility over when, where and how to work—rather, it will take active planning to balance employee preferences with company goals and costs.
4. Building and sustaining culture in a hybrid model. New models bring new challenges.
5. Understanding your employees’ unique needs. Determine how space enables people to do their best and what the different requirements are based on mental or physical differences.
Retail has clearly been challenged; closed stores mean no sales. Reinvigoration will be shaped by concepts that are either hyper-convenient or that offer a unique, destination worthy experience.
This sector has been given more attention than ever before, and demographic forces will keep it at the top of the agenda.
Life Sciences is white hot.
Travel restrictions have hurt hospitality, but once they ease, occupancy will eventually return. Indeed, structural changes such as growing incomes and the ongoing shift to an experience economy support the sector's long-term prospects, underpinned by a lack of virtual substitutes for hotel accommodation.
Hotels are down, but they aren’t checking out.
With urbanization on the rise, this sector is looking strong based on demographic shifts—for example, people renting longer before purchasing a first home and needing more storage, or people moving to cities, exchanging larger living spaces with smaller urban dwellings, and looking for more storage.
Self-Storage locked in.
WHAT THEY MEAN FOR REAL ESTATE
10 KEY LEARNINGS