Commercial Offices Coming Back, Residential Grows Stronger

As the pandemic wears on, it appears that commercial real estate agents are expecting a good part of their occupancy to return back to the city.

Offices will no longer be crammed with lots of employees. Social distancing, Plexiglas and remote workers will comprise the new urban workforce.

As expected, a large percentage of individuals will be working from home on a rotating basis. They are calling the new configuration of city office space to be a kind of hybrid. The flex-space approach to offices will be more the norm now as companies look to leverage the space that they have with fewer people.

Wall Street will continue to maintain a strong presence in New York City, but a large percentage of their employees will be working remotely until the virus is under control. Businesses have clearly learned to adapt, and the transition to the flex-space model will be the new normal.

After Wall Street returns to its new normal, the hospitality and retail businesses are expected to slowly reopen. This reopening process is clearly going to be a gradual one, but by 2022, many of the businesses that have been able to weather the pandemic storm will be back with doors open with protocols in place.

This does not include many of New York City’s restaurants, which are under a brand new Mayor de Blasio lockdown as of December 14th.

Warehouses and data centers have not had the negative downturn that office spaces and retail spaces have had to experience. They grew throughout the pandemic and are experiencing strong rental rates and low vacancy rates.

As far as the residential retail market outside of New York City, most regions within a 60-mile radius of New York City are experiencing super strong spring-like market buying surges.

Record low mortgage rates, with a continued strong buyer demand and a robust number of all-cash buying, has depleted the available existing home inventory to levels not seen in a quarter of a century. The real estate market on the whole will go beyond the record high prices recorded back in 2007, before the Great Recession.

As recently reported, all-cash sales deals on residential properties outside of New York City represent approximately 36% of the total market, according to the National Association of Realtors.

Perhaps one unique metric is that Nassau County in Long Island came in as the top cash market, reporting 49% of all sales as cash deals.

What is driving the all-cash market is record low inventory. All-cash transactions climbed another 6 percentage points in the lowest-priced tier which reaches up to $100,000, where they comprise 65% of the total market.

As the real estate market booms, the US mall owner market continues to face a great financial crisis. As indicated over the last several years, store owners have been closing stores at record rates. As of 2020, over 11,000 retail locations have announced closure this year, according to CoStar Group.

Lockdowns have made it difficult for American malls to function as they had been within our economic cultural norms. In addition to the pressure being placed on malls, major anchor tenants such as Lord & Taylor, Sears and Kmart, Stein Mart have announced major closures. In addition, the bankruptcies of Stein Mart and Pier 1 have also contributed to the dire straits for many of America’s malls.