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How COVID-19 Could Destroy The Urban Real Estate Market

As countries around the world start re-opening their economies, new realities are starting to emerge. For instance, it is now required to constantly wear a face cover in public, observe measures of social distancing, and most notably the institutionalization of working from home. The two later confinement measures have big implications for real estate. It could destroy the urban real estate market.

A. The rise of home delivery services

To be sure, this unfortunate situation became a goal mind for digital business leaders to push forward a new value proposition. Most businesses from restaurants, grocery shops, retailers, and even convenience stores are now offering home delivery services or something similar. Indeed, you can now practically find everything you need online and it would be delivered at your home any time of the day.

Even though forced by necessity, some businesses discover new opportunities and in some cases expanded considerably their customer base. Certainly, the AB testing period A.K.A “Covid19 Home Confinement Period” revealed to have been extremely lucrative for some business owners.

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B. The democratization of working from home

Even though this policy has been in place for some time right now, it was not widely spread. COVID19 forced institutions to move forward rapidly with the experiment. Certainly, the challenges are enormous and many questions to be answered. But, this virus has encouraged all these institutions and companies to take a more progressive approach toward adopting and implementing digital transformation. Today, working and study from home have become a new reality for many. While, this is particularly true, for typical white-collar jobs in the service and technology industry. Others, don’t enjoy this privilege, well yet.

The negative impact on urban real estate

One of the most disastrous consequences of all those stays at home, work at home, and study from home policies is the foreseen collapse of the urban real estate industry. Perhaps, because the warning signs were already visible. As you walk around your city a staggering observation is emerging in many malls, commercial districts, or avenue, you see many empty spaces.

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In fact, commercial real estate is going through a second wave of disaster except for some limited clusters. Truly, the 1st was the challenge of online retailers and co-working spaces. Now, with Coronavirus forcing companies, businesses, institutions to rethink their model, scaling back on investments. As its stance, the urban real estate industry is already bracing for worse. A record number of stores, companies, and restaurants are already either closing or relocating to smaller spaces. In addition to a wave of people departing from crowded urban cities to relocate to suburbs in search of better quality lives. Inferring loss of revenue for major cities.

Actually, the new model will help many businesses save money on space. Thus reducing the amount of space needed or just going completely virtual to take advantage of the new norm.

Coronavirus could collapse the commercial real estate
Empty office space

Nevertheless, as it is always the case in moments of crisis, new dynamics in the industry will certainly emerge and opportunities will be created.

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