Remote work and mobility will have the most significant impact on real estate in the next year, according to an annual report from The Counselors of Real Estate, a global consortium of commercial property professionals and experts.
The coronavirus pandemic and its attendant increase in remote work lead to an uptick in migration nationwide that some in the industry have termed “The Great Reshuffling.” That movement is one of the factors that has lead to an unprecedented increase in homebuyer demand and record-low inventory in markets across the country.
While an average 32 percent of workers have returned to their offices as of June 18, Michel Couillard, CRE’s 2021 global chair, noted in a webinar Wednesday that remote work could double permanently, impacting land use and homebuyer demand.
“After years of … [a] trend towards urbanization, the pandemic generally caused the movement away from urban cores particularly for those with higher income, who could afford to move or for those lower-income individuals seeking lower cost of living,” Couillard said.
“Most of these relocations remained within the original region — 84 percent of them — and while some are returning, it is unknown as to the permanence of these movements or whether they represent a true urban exodus. Time will tell as to which population-migration and space-use behaviors will endure.
“As all real estate sectors will be watching closely and poised to react, property owners and managers should be flexible in order to accommodate these demand driven changes in the desired use and location space.”
CRE is comprised of 1,000 professionals in 20 countries and territories holding the Counselors of Real Estate credential and focuses on commercial property, but the organization’s report, “2021-22 Top Ten Issues Affecting Real Estate,” recognized the interdependence of commercial and residential real estate. The report ranked “housing supply and affordability” as No. 6 among the top 10 issues.
“In the US, the supply of housing was already anemic, but when the pandemic hit, plunging mortgage rates and the resulting surge in sales created what is now an historic low level of housing inventory,” Couillard said in a statement.
He pointed to decades of underinvestment and under-building of both affordable and market-rate housing that would require “a concerted, long-term nationwide commitment” to build more housing of all types to overcome.
“A severe lack of new construction and prolonged under investments have led to an acute shortage of available housing to the detriment of the economy and certain segments of the public,” Couillard said.
“The strength of this trend affects every region of the country, creating an under-building gap of 5.5 to 6.8 million housing units since 2001. The Counselors of Real Estate agrees that lawmakers must work to expand access to resources, remove barriers, and incentivize new development involving the private sectors.”
Couillard pointed to a “Not In My Background” (NIMBY) mentality as a barrier to housing development that may be on the wane.
“We are seeing several legislative initiatives to defeat NIMBYism at the local and at the national levels as well as an infusion of affordable housing financing,” he said.
“Taken together, the light at the end of the tunnel looks more like a bright sunshine of hope that we’re finally moving towards the end of affordable housing discrimination than the headlight of an oncoming train.”
CRE’s other top issues affecting real estate were technology acceleration and innovation; environmental, social and governance (ESG) initiatives; supply chain logistics; infrastructure; political polarization; economic structural change; adaptive re-use 2.0 and bifurcation of capital markets.
The full report can be found here.