Saying that COVID-19 has changed our world might just qualify you for the “understatement hall of fame.” The ways in which people communicate, live, work and play are radically different today than they were just over a year ago.
Virtually every type of business, educational and social platform now operates on a paradigm that has evolved since the onset of the pandemic. Real estate is no exception. While segments of the commercial real estate market are attempting to regroup from closed businesses and abandoned office spaces, the residential real estate market has skyrocketed. The migration away from crowded urban areas toward open, suburban locales has reduced housing inventory and sent home prices soaring to new heights.
Are these changes here to stay?
According to Rob Norman, president of Coldwell Banker New Jersey, some new trends may be with us for the foreseeable future.
“The market is extremely hot due, in large part, to COVID-19 related trends,” Norman said. “Companies have been forced to adopt remote working procedures, and people like them. The work-at-home model saves employees commuting time and travel expenses. If business owners continue to allow more people to work from home, they can reduce the amount of office space they lease and save money after the economy opens up.”
A survey conducted for Coldwell Banker in March of 2021 by the Harris Poll reported that one in five homeowners plans to sell their home within the next 12 months. Younger homeowners are the most likely to sell. Among homeowners age 18 to 34, 39% say they’ll sell in the next year, while 36% of 35 to 44-year-olds plan to sell in the same time period. Two of the key forces driving homes sales are the “ability to work remotely” and “desire/need to upsize.” The “ability to work remotely” was cited by 30% of the group surveyed. The desire/need to upsize garnered 39% of respondents. All of these trends, along with record low interest rates, bode well for a strong residential real estate market after COVID-19 restrictions are lifted.
While COVID-19 and the outmigration from major cities have fostered the surge in the residential real estate market, Craig Cherry, New Jersey division president of Toll Brothers, believes there are other factors at play.
“Demand for new homes remains incredibly strong, reflecting favorable demographic trends, a very tight supply of for-sale homes stemming from a decade of underproduction, low mortgage rates and a renewed appreciation for the importance of the home,” Cherry said. “The Toll Brothers build-to-order model is particularly well-suited to this moment.”
Cherry explained that people can now live “… where they want to live, instead of where their job previously required them to live.” Toll Brothers homes feature flexible home designs that enable buyers to choose their structural options and personalize their home to meet their needs and fit their lifestyle. He added that families sometime need space for two home offices as well as private areas where children can participate in remote learning.
“We’ve also seen a trend in our active adult communities relating to today’s COVID-19 market,” he said. “People are purchasing their retirement homes earlier than in the past. Many are still employed full time. Since they now have the ability to work remotely, they can buy their dream home in an active adult community and start enjoying the onsite amenities and low-maintenance lifestyle right away.”
The movement toward younger active adult buyers and renters was also spotlighted by Moshe Botnick, vice president of development at Extell Development Co. Extell is building two Jersey Shore communities, The Lofts Pier Village in Long Branch and Barnegat 67 in Barnegat.
“We are seeing a wide variety of people from all age groups buying at The Lofts Pier Village,” Botnick said. “The ability to work remotely, at least part of the time, has mitigated the objections to long commutes that have kept some buyers from moving to the Shore. The Lofts is a resort-style, luxury condominium community set overlooking the beach. Our residents love to sit on their private terraces and balconies while working remotely and enjoying the ocean views.”
Barnegat 67, Extell Development’s age 55-plus rental community, is also benefiting from an influx of younger, active adult tenants. Vibrant seniors are selling their single family homes in record time and at unprecedented prices. Renting gives these active adults the opportunity to move quickly when their homes sell and start living a carefree lifestyle. Barnegat 67 also provides a host of onsite amenities as well as restaurants, retail stores, a Planet Fitness facility and medical offices.
As residential real estate has prospered, COVID-19 restrictions have had a dampening effect on the office, retail and restaurant markets.
“The commercial real estate climate has changed since the beginning of COVID-19, especially in New York City” said Ira Bloom, director of commercial real estate for Kushner Companies. “Now that people are getting vaccinated, we are detecting the beginnings of a market resurgence which may manifest itself in the second quarter of this year.”
The movement away from daily trips to the office has had a ripple effect on retail and restaurant businesses. Bloom noted that COVID-19 closures and social distancing have hurt these segments in Midtown Manhattan more than they have in some lower Manhattan neighborhoods, where local businesses serve more neighborhood residents than commuters.
“We continue to be bullish on New York,” Bloom said. “There is a synergy that occurs when people work together face to face and interact. It may take some time for office space to bounce back, but in the meantime, anyone considering leasing space in Manhattan should take advantage of the market’s current conditions. Landlords are very flexible right now, and it is a great time to negotiate a lease.”
Bloom added although some segments of the commercial market have suffered, others have done quite well during COVID-19. E-commerce companies such as Amazon have increased their warehouse and distribution spaces, fueling shortages in the industrial segment of the commercial market. Some suburban retail and apartment properties, including Kushner’s holdings at Pier Village in Long Branch, have also done quite well.
None of the experts claim to have a crystal ball, but all generally agree that the impact of COVID-19 will be felt in the real estate marketplace after restrictions are lifted and some degree of normalcy is restored.
Stan Lemond is an award-winning marketing consultant and writer who has more than 40 years of experience. His work has appeared in The Star-Ledger, Staten Island Advance, Trenton Times and South Jersey Times as well as Jersey’s Best.
Original Article Appeared at : Source
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