The economy is bouncing beyond expectations, but housing affordability is rapidly deteriorating as rents and house prices rise, forcing more home buyers to look to the Belt of the Sun. Most employees spend an average of three to four days a week in the office, with a quarter of them not showing up at all. And more real estate investors are turning to consultants and software to assess extreme weather and climate risks.
This is one of the main findings of the national real estate report prepared by the Urban Land Institute and corporate accounting consultant PricewaterhouseCoopers.
Urban Land Institute’s 111-page report, Emerging Real Estate Trends in 2022, surveyed 1,700 property owners, developers, asset managers and other industry professionals and found that overall occupancy and rents across the country fell during the pandemic. less dramatically than during even a modest scale. previous recessions.
However, a separate market report from the Greater St. Paul Building Owners and Managers Association found that office occupancy in downtown St. Paul fell from 91 percent to 89 percent last year, likely reflecting the economy of the pandemic era and its turn towards remote work.
Residential growth continues. There were 10,572 people living in downtown St. Paul as of August, according to Maxfield Research, up 117 percent from the 4,800 residents there in 2010, up from 10,298 residents last year. The vacancy rate in the city center was 9.6 percent, up from 7.2 percent a year ago.
The National Bureau of Economic Research estimates that the recession is over and has been going on for over a year. The economic downturn – the shortest on record – lasted two months and officially ended in April 2020, and experts predict that jobs could recover to pre-COVID levels by 2022.
But, according to the Urban Land Institute, the workplace will change.
HOME AT WORK
Industry officials said hybrid work will transform offices, and companies will be considering whether to repurpose their additional real estate or completely cut staff as employees leave remotely for at least part of the week. “The pandemic has exposed previously unknown reservoirs of flexibility in how the private sector can function,” says the ULI report, which also highlights an increase in home purchases.
However, the impact on square footage may be negligible if companies choose to keep dedicated workspace for each employee rather than shared, or if the remaining employees have more room to disperse. The needs of corporate jobs will evolve in different ways as drug manufacturers and the life sciences industry fuel demand for new laboratory space.
Real estate experts say that without government and private sector intervention, the racial and socioeconomic gap in housing will widen. More and more people are moving to affordable small towns and suburbs as companies continually rely on teleworking, such as in southern cities such as Nashville, Tennessee; Miami, Phoenix, Charlotte, North Carolina; and Austin, Texas were the top players. “The recession pandemic has not helped release steam in the hot housing markets,” the report said.
Some real estate professionals predict that young people between the ages of 18 and 30, who postponed moving to cities during the pandemic, will soon congregate, pushing house prices up even as the suburbs regain their appeal.
When visiting the office is not part of the daily routine, more employees are willing to live long distances from their workplaces. The Zillow study found that house prices in many localities with longer commutes to work are rising faster than in residential areas closer to employers.
Meanwhile, the annual number of natural disasters more than doubled from 1980 to 2016 and has increased since then, a sign of environmental degradation that the private sector is increasingly aware of. However, many individual developers consider this problem so serious that they are reluctant to do more than the minimum to obtain eco-certification. Buildings account for over 40 percent of global energy use and carbon emissions, according to international climate research cited in the report.
Some large real estate companies assess the climate risk of their portfolios by relying on climate risk analysis consultants and software – an emerging artisanal industry that still lacks common standards and metrics, experts say. For more information, visit uli.org.