Before Covid-19 took the world by surprise in early 2020, North Carolina’s CRE (Commercial Real Estate) industry had been enjoying years long of steady growth. Obviously, with the shift towards remote work, the retail space all but coming to a dead-halt, and ongoing uncertainty there have been many questions around the future of the industry. In this article, North by Northwest looks at some of the most reliable market predictions for the CRE industry. And particularly those that will affect North Carolina.
So what can we expect moving forward?
Even before the pandemic, market studies indicated that increasing numbers of people were opting for a “flexi-work”. Or else there was the desire to add a working from home option to their work week. Understandably, this gradual transition has meant that the real estate industry is re-considering their commercial office spaces as “flex space.”
Suburban office spaces are predicted to recover more quickly, and that is largely because public transport options in larger cities were severely impacted by Covid-19 shutdowns. As for urban office availability, according to a market report by CBRE “Occupiers are increasingly demanding flexible space options, shared meeting space, indoor air quality, connected building apps and touchless technology when considering new leases. Buildings that provide these desired amenities may find more favor by enterprise tenants as leasing volume resumes.” Obviously the global trend towards remote work during the coronavirus period is the biggest adjustment to the commercial real estate market, which CBRE predicts could see as much as a 15% decrease in needed office-space.
With the vaccine rollout around the world, employers are gradually beginning to welcome a return of workers to the office space. We’ve begun the same process at North by Northwest by welcoming back vaccinated employees. Nonetheless, most companies have remained largely remote into 2021. This trend could continue into the foreseeable future. Many employers are navigating flexi-work spaces and holding off on renewing their tenancies until more economic stability returns.
How is North Carolina’s CRE Industry Impacted?
In the southeastern states, and in particular in North Carolina, positive predictions are being made. Raleigh-Durham and Charlotte were among the cities specifically highlighted by The National Association of REALTORS for resilient market growth. Because North Carolina’s population continues to rise. And during the pandemic many families and individuals relocated to the state. This has helped absorb some of the most adverse impacts to the CRE market like apartment vacancy. The reason for the resiliency in North Carolina is due to a combination of factors. But is largely because of affordability in the cost of living and working. As well as the ability to work from home with ease.
Moving forward in 2021 and into 2022, it is likely that many businesses will move towards renting coworking spaces instead of having designated office space. This move will allow the flexibility of working remotely while also having a base for the business. Though it should be noted that establishing a coworking space is quite complex. A large-scale shift to this type of workspace will take thorough planning and preparation.