These 3 CRE Experts Are Optimistic About 2021. Here’s Why.
2020 was a tough year.
Between the pandemic, lockdowns, and economic volatility, the obstacles were often overwhelming.
Fortunately, there are signs that commercial real estate (CRE) is well positioned for success in 2021.
Below, we cover why three CRE experts are feeling optimistic heading into the new year.
1. Vaccinations will unleash pent-up demand
As 2020 ended, we saw encouraging signs indicating a potential economic recovery.
The stock market began trending in the right direction, and the FDA issued an emergency use authorization for a COVID-19 vaccine.
According to Ryan Severino, Chief Economist at JLL, these factors will combine to “unleash pent-up demand.”
“The S&P 500 grew by roughly 16% in 2020 despite the massive headwinds and challenges posed by the pandemic. And that includes the significant decline that occurred after the initial onset of lockdowns and shutdowns earlier in the year. Although markets benefitted from both monetary and fiscal support, markets are clearly also looking ahead to brighter times, even if markets are not the economy. Widespread vaccination will almost certainly unleash pent-up demand for goods and especially services starting in the latter half of 2021 once widespread immunity has occurred which should benefit businesses, including publicly traded corporations.”
2. Consumption spending will rise
Stephen Newbold, National Director of Office Research for Colliers International, looks to economic forecasts as an indication that brighter days are ahead in 2021.
“The combination of vaccine rollout, high savings ratios, and another round of stimulus checks, have the potential to drive up consumer spending. The December Consensus Forecasts survey of economic forecasts projects that personal consumption will grow by 4.6% in 2021 following a 3.8% contraction in 2020.”
3. CRE investment is likely to increase
Joseph Ori, Managing Director of Paramount Capital Corp, noted available equity capital and discounted CRE assets will play a role in improving market conditions this year.
“There is over $200 billion in real estate equity capital on the sidelines and much of this capital will be put to work in 2021 in all property types. There are also many discounted CRE assets that are ripe for investment including hotels, malls, office buildings and urban apartments.”