Four Real Estate Trends to Watch in 2022

Real estate has always existed in a constant state of flux – as behaviors and consumer preferences change, so do the ways in which people interact with the buildings and broader built environment.

The last two years have pushed that maxim to the extreme, accelerating changes to the traditional ways of living and doing business. While a return to “normal life” appears closer than ever, many of these shifts are irreversible and are poised to continue in the months and years ahead.

In the context of these most uncertain of times, we’ve asked the Antenna Spaces team to look in their crystal balls and share what they expect will be the trends, challenges and opportunities facing the real estate industry in the coming year. 

What trends will make the biggest impact on the real estate industry in 2022? We humbly share our forecasts here:

 

1. Desire for Connection to Drive Experimentation in Workplace Interior Design 

Over the past two years, workers throughout the United States and across the globe grew accustomed to working from home, enjoying the time savings from reduced commutes (extra sleep, more time with family and for personal fitness and hobbies), while home offices transformed from makeshift setups to more permanent, dedicated spaces. However, the isolation of working away from managers, mentors and colleagues eventually had a less rosy effect: a heightened desire for in-person human connection.

Even as companies shift to and prepare for hybrid work, the reality has set in that technology cannot replace all in-person interactions. Those interactions, and the sense of connection, creativity, and energy they generate, are a key ingredient of great work. They also happen to be impossible to replicate over Zoom, Google Meet, or Microsoft Teams.

As such, in 2022 and in coming years, workplace design will address the desire to optimize this elusive ingredient head-on. An example is the proliferation of developer-owned and -operated co-working spaces and their emphasis on social club atmospheres, particularly in suburban locations where many people relocated during the pandemic.

Taking cues from university and college campuses, reimagined workspaces are now being unveiled featuring manicured lawns, picnic areas, and running trails, fitness centers offering group training classes, elevated culinary options, and a range of programming — from happy hours and wine tastings to nutritional seminars and themed events. As employees mull their return to office plans, these built-in opportunities for social interaction will help entice them back.

Christian Rizzo, Vice President


2. Reckoning Coming For Companies’ Climate-Focused ESG Promises 

For the last several years, hundreds of real estate companies – from investors and developers to property managers and private equity firms – have made wide-ranging promises to reduce or even eliminate carbon emissions, diversify their boards and use greener construction materials. These commitments, commonly categorized as Environmental, Social and Governance (“ESG”) programs, came as lenders, investors and tenants increasingly made funding, leases, and even executive pay dependent on a more environmentally and socially redeeming approach.

The year to come promises to bring a new reckoning for these companies, as they increasingly face calls to transform their promises into proof. While many ESG initiatives were undoubtedly launched in earnest, that hasn’t satisfied the many skeptics or cynics who dismiss them as toothless, ill-conceived, or perhaps even worse, PR-friendly lip service.  

As the industry prepares to show its collective cards, a race is on for streamlined reporting methods and other tools that can measure and fuel faster, more impressive progress. The real estate players that can successfully demonstrate that their pledges were both sincere and effective stand to benefit enormously in 2022 and beyond.

Dan Ivers, Vice President

 

3. Supply Chain Issues Aren’t Going Away Just Yet

A year ago, many people were unfamiliar with the term “supply chain”; now, you can’t go a day without hearing it. And with good reason. Factors including product slowdowns and a labor shortage have delayed the movement of goods across the globe, making it impossible to get certain items and driving up prices of others.

The effects on the real estate industry are significant. 

On the most basic level, construction has become more expensive and complex. Lumber prices, which made headlines in the spring, are spiking again. Prices for steel and other construction components, including some produced overseas, are also on the rise. Delays and price overruns are not new to the construction space, but the extent of these issues could be cause for concern. For retailers and their landlords, a slowed supply chain certainly impacts in-store sales, presenting another challenge to the struggling sector.

Reaping the benefits is industrial, which is seeing increased demand for space, as companies seek to bulk up their inventories, on-shore manufacturing, and avoid port traffic. 

One thing is clear. Professionals across much of the real estate sector will be in for a tumultuous ride.

Shlomo Morgulis, Director

 

4. Mixed Signals Persist About The Coming Office Recovery

While commercial office leasing activity gained some momentum in 2021, the sector has yet to rebound to pre-pandemic levels. Net absorption remains in the red and there is more vacancy in the market than spaces actively being leased, according to a Colliers Office Market report. Mixed signals and prognostications about timing of the sector’s recovery continue to reveal that, on a national level, the marketplace is having difficulty grasping developing trends in the office sector and how that will impact asset values in the long-term. 

The pandemic has disrupted, perhaps forever, the way in which businesses utilize office space. While the market remained cautiously optimistic that employees would flock to the workplace following last year’s vaccine rollout, the Delta and Omnicom coronavirus variants renewed concerns about the virus, leading major office occupiers to either push back return-to-office plans or adopt flexible work policies enabling employees to work remotely. 

Recent data from JLL reveals that demand for flex space has surged amid the pandemic, suggesting there is increased desire from employers to return to the office and a sense of normalcy in some form. 

For commercial appraisers and valuation professionals, it’s difficult to analyze the full impact of market disruption on office assets when assessing such unprecedented circumstances – especially considering the fact that valuation professionals rely on historical and currently developing trends to forecast future market performance. Still, in a recent survey conducted by commercial appraisal software provider Valcre, more than 75 national appraisers opined on future timing of the office rebound: a third said it will take between two to three years before occupancy rates push rents back up to pre-pandemic levels, while another third anticipated the rebound would take between four to seven years. 

Champaign Williams, Account Supervisor

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