The impact of COVID-19 on commercial real estate

While the COVID-19 Pandemic has wreaked havoc on the retail and office market, residential
activity has been on fire. According to the Census Bureau, annualized spending was $667 Billion
in 2020 for residential real estate, or an increase of 16% over 2019. Multifamily investments
have been strong also with prices per unit sometimes north of $200,000 in Western
Massachusetts. While there is great uncertainty about what the office and retail markets will
look like in the future, most believe the office market will rebound, but will look very different.
For those employees who enjoy working from home, companies will have to allow some
flexibility for them while still requiring a return to a normal office environment.

There is also a great deal of speculative development in the works, as noted with the planned
development of 2.1 million square feet around Fenway Park in Boston by WS Development, as
lead partner along with the Fenway Sports Group, as reported in the Boston Business Journal.
Also, while on-line shopping has helped warehouse/distribution activity, those fulfilling orders
and refining new products have to work from somewhere–as evidenced by the expansion of
Amazon’s office space at 1 Wharf Rd in Boston’s Seaport District. This 630,000 SF office will
house 3,000 new employees. No, the office and retail markets are not dead, just unconscious
right now.

By: Bill Low, President at L&P Commercial