As 2021 begins, the real estate world is starting to process and plan for the achievement of herd immunity in the United States – the moment when transmission of covid-19 cases ceases due to mass vaccination and acquired immunity. Whether that occurs in July or December is beside the point; after one of the most challenging years ever in commercial real estate, many can start to see the light at the end of the tunnel.
The planning under way is far-reaching in scope and will have many consequences (seen and unforeseen), which will indelibly alter the course of an industry markedly traumatised by the events of the last year. What is certain is that nothing is certain; commercial real estate will look wildly different in 2022 than it did in 2019.
One broader dynamic we foresee on the horizon is a coming wave of the ‘single-tenantisation’ of the commercial real estate market. What does this mean? To fully unpack this thesis, let us consider first the prevailing sentiment over the last year. Beaten by the unprecedented carnage of 2020 and vast restrictions and closures, the CRE industry has become very bearish on the mid-term outlook of the segment – for the purposes of this article, let’s assert that this applies to office and retail specifically, with industrial and multi-family being part of separate structural and cyclical trends that make them individually unique.