The Counselors of Real Estate Discusses the Consequences of Covid-19 on Real Estate Space

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The use, location, mechanical infrastructure, and interior configuration of commercial buildings are being re-examined due to Covid-19.

Many classic retail formats and retailers will never recover and require creative re-use or fundamental redevelopment to replace their former vitality.

Space utilization was ranked number seven on The Counselors of Real Estate’s 2020-21 Top Ten Issues Affecting Real Estate. Many new space-related ideas, solutions, and procedures have been born through the Covid-19 pandemic and will remain a part of society even after the pandemic subsides.

According to the report, the use, location, mechanical infrastructure, and interior configuration of commercial buildings are under stress. High-rise, urban core buildings will suffer in the short term, while more suburban office blocks will experience reinvestment that has evaded them for much of the last generation. The focus on mechanical systems in all buildings will cause major redesign and rebuilding to improve indoor air quality and reduce transmission threat of airborne particulates. Attention will be on the health of building occupants across all aspects of their journey: building entry, vertical transit, air quality, and even mitigation of unsanitary plumes in restrooms by adding toilet lids.

The report states the clear beneficiaries from this crisis appear to be technology companies and e-commerce providers. A huge increase in the volume of goods purchased online is not only generating short-term benefit for those providers, but also significantly increasing the literacy of online shoppers. The result will be catalytic post-pandemic behavioral change on provisioning and distribution of retail and wholesale goods and services, fundamentally changing the expectation of normal. Many who had resisted the idea of online grocery shopping have since embraced its convenience. At scale, this migratory behavioral change will not only transform city planning—replacing the need for large-format grocery stores with smaller specialized markets—but also result in more direct connections between food production and consumers by removing the need for product staging and retail display. Consumers will have access to fresher produce, at lower costs, either directly from producers or regional wholesalers.    

Many classic retail formats and retailers will never recover and require creative re-use or fundamental redevelopment to replace their former vitality. In that respect, the Covid-19 crisis is catalyzing change, rebuilding, and transformation on a scale not seen since the end of WWII.

The Counselors stated acceleration is expected of planned, medium-density, mixed-use communities in place of old retail formats, with design that will embrace walkability and integration of uses that enable continued normalcy in case of subsequent lockdown orders. Intentional design will deliver social connectedness with physical distancing that integrates residential, office, retail, and public spaces that closely resemble older European cities.

Density and affordability of housing, job opportunities, social services and health care, as well as cultural, sports and recreational activities will be even more key in urban planning, with significantly-revised expectations on capacity as society climbs out of the pandemic period.

The Counselors of Real Estate ranked Covid-19 as its leading concern, followed by Economic Renewal, Capital Market Risk, Public and Private Indebtedness, Affordable Housing, Flow of People, Space Utilization, Technology and Workflow, Infrastructure, and ESG (Environmental, Social, and Governance), respectively.

For additional information and perspective on each issue, visit https://www.cre.org/topten.

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