Retail Revamped

The shift from brick-and-mortar retail stores to e-commerce has only accelerated during the pandemic, increasing the need for industrial and last-mile logistics facilities. In the third quarter of 2020, e-commerce comprised 14.3 percent of total retail sales, compared to 11.8 percent in the first quarter.¹ The crisis forced consumers to change their shopping habits. And with more online retail options for groceries, electronics, medication and more, this increase will likely be permanent. 

A Tale of Two Shopping Centers

Generally, grocery store-anchored shopping centers have remained stable-people still need to buy food during a pandemic-but traditional malls have suffered. Some major retailers and mall operators have filed for bankruptcy, and their woes are likely to continue as e-commerce expands. Cities may benefit from rezoning these properties into other allowed uses, such as residential.

A Return to Urban Apartments and Offices

At the beginning of the pandemic we expected a potential long-term exodus from cities to the suburbs. As we've seen, many jobs can be done remotely. However, most employees still benefit from working on-site with their co-workers. This is especially true for young employees beginning their careers, many of whom moved in with their suburban families to save money. It's hard to learn the ropes, bounce ideas off colleagues or find a mentor from your laptop at home. Because major companies are often located in urban areas, employees-especially younger workers-may return to the city quickly as offices reopen.

The Need for Affordable Housing

The pandemic and its corresponding economic downturn brought renewed attention to the affordable housing crisis. Although measures to preserve current affordable housing via eviction moratoriums and rent control vary from city to city, they are important. But we must do more to reduce the growing homeless population. That means rethinking how we build affordable housing to decrease construction costs. Modular design can play a beneficial role, as can public-private partnerships. We should also consider constructing more buildings with a mix of affordable and moderate-income tenants. 

Rent Payments Remain High Overall

Rent collection statistics-with the exception of several malls-appear steady so far for high-quality assets across property types, with distress appearing idiosyncratic, related to specific tenants and how their business was impacted by the pandemic," Calanog said.

The National Multifamily Housing Council's Rent Payment Tracker found 93.6 percent of apartment households made a full or partial rent payment by the end of November 2020, a slight decrease from the 95.2 percent paid in November 2019 and similar to previous months ². Increased unemployment benefits, Economic Impact Payments and other legislation passed in response to the pandemic may have played an important role in keeping these rent payment percentages high.