M id A tlantic Real Estate Journal — 2021 Forecast — January 22 - February 18, 2021 — 13A 2021 F orecast
By Carlo L. Batts, Rittenhouse Appraisals Coming together to make 2021 a successful year
e are starting off 2021 with a fresh perspective and the
activity and demand. For the Philadelphia market that re- lies heavily on Eds and Meds, the solution will be to reopen college campuses, bringing students back into the rental market. From an economic stand- point, we must diagnose the true problems in the market, identify troubled assets and determine where market de- mand will be going forward. Office is at the top of the list, looming with questions on how the return to the office will look. For many companies, the office will look different. We
expect to see more telecom- muting in the future, with of- fice visits as needed only. For others, the need to re- turn to the office to reconnect and collaborate is a must. But how does this effect the workplace? What does the future of office look like? Will social distancing determine future office layouts? Will shared desk space be a thing of the past? Will more com- munal collaboration rooms be installed to accommodate team meetings? These are all the questions owners and op- erators will have to address as
vaccines arrive and people are ready to return to the office. The retail market was not so lucky. Looking around the Philadelphia region alone, both local and national retail- ers are shutting their doors. Restaurants are struggling to stay afloat. Movie theaters are shutting down. This situation is leaving thousands of retail space vacant for building own- ers with no real demand in the market. Looking for ways to reposition those spaces and seek out new tenants will likely be the hardest challenge for 2021.
So how do we correct this market? Will taxes be cut or increased? Will rates continue to go down or should we be bracing for rates to soar. Will commercial property values continue to decrease as the residential values are seeing all-time highs? There are still many ques- tions as to how we turn this around and, in working to- gether as a community, we will find a way to forge ahead and be successful again. Carlo L. Batts, MAI is principal of Rittenhouse Appraisals. MAREJ
h o p e t h a t 2020’s mess is behind us. But, in order to succeed in 2021, we will have to work together to get through the pandemic and reacti - vate the economy.
Looking back at 2020, we did see some sectors of the industry closing on a strong note. The industrial market continued to see demand, outperforming the nation as a whole with higher rental rates, with lower vacancy and cap rates. Mu l t i f ami l y r ema i ned strong overall, though some obvious increases in vacancy have occurred. Many units were delivered to market in 2020, with several large-scale projects still underway for 2021 completion and opening. The absorption of these new units will be contingent upon 2020 has created some shifts in both the office and indus - trial markets that will last beyond 2021. These include a renewed importance on em- ployee health, an acceptance of working remotely, embracing of telecommunication technol- ogy, a further acceleration of e-commerce and blurring of the lines between retail and logistics. The location of New Jersey as an industrial hub as well as a suburb of New York City has put it at the focal point of all of these changes. The New Jersey economy, like the rest of the country, has taken a hit as a result of COVID-19, but over the past quarter, it has been on a slow path to recovery. New Jersey has seen its unemployment rate decrease over the past few months and has regained more than half of the jobs that it had lost as a result of the pandemic. Earlier this year the State passed its 2021 fiscal budget, which included a few notable items and was set to $32.7 bil- lion for the nine months from October 2020 until June 2021. continued on page 28A Avison Young New Jersey 2021 Forecast Report
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