1. COVID IMPACT
  2. Real estate

How Coronavirus could collapse the commercial real estate

As countries around the world start re-opening their economy new realities are starting to emerge. For instance, it is now required to constantly wear face cover in public, observe measures of social distancing, and most notably the institutionalization of working from home and studying home from home. However, all those actions are positive for public health but negative for business. Indeed, confinement measures have stressed out from a business point of view, big observations that could have big implications for the commercial real estate market.

A. The rise of home delivery services

To be sure, for skeptical this unfortunate situation became a goal mind for digital business leaders to push forward a new value proposition and it worked. Most businesses from restaurants, grocery shops, retailers, and even convenience stores are offering home delivery now. You can now practically find everything you need online and it would be delivered at your home. Chances are after the crisis evades the model will still continue.

Most importantly, some businesses were forced to explore a model they were never fond of. Forced by necessity, they discover new opportunities and in some cases expanded considerably their businesses. The AB testing period revealed to be extremely lucrative for some business owners.

B. The democratization of working from home and studying from home policies

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 the policy. Today, working and study from home have become a new future for many. While, this is particularly true, for typical white-collar jobs in the service and technology industry. Others, don’t enjoy this privilege yet.

The negative impact on commercial 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 commercial real estate industry. Perhaps, because the warning signs are already visible. As you work down many malls, commercial districts, or avenue, you see many empty spaces.

In fact, commercial real estate is going through a second wave of disaster. Truly, the 1st was the challenge of online retailers and co-working spaces. Now, with Coronavirus forcing companies, businesses, institutions to rethink their model most landlords are on the edge. As a matter of fact, some of them don’t even know if they will still be in business in the next 02 years.

Actually, the new model will help many businesses save money on space. Thus reducing the amount of space needed or just going completely virtual will be the new norm. That is because, the number of people those businesses can accommodate will be limited.

Coronavirus could collapse the commercial real estate
Empty office space

As its stance, the commercial 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.

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