K. C. Conway, CCIM’s economist helps us predict what will happen in 2021.
First, he says employment numbers dictate the needs for CRE space. Secondly, transport metrics, including travel industry dictates the needs for other infrastructure. The third metric is the pulse of capital. The volume of loans and the delinquencies of property types as well as bank health, is a predictor for the funding for CRE.
Of course, COVID-19 has had a large impact on all these. The need for office space is down. Travel is down. While there is an increased demand for many kinds of delivery, there are not more goods overall being delivered. There is currently a more than 6 time the expected number of bad debts. He says, “there is substantial erosion occurring.”
K. C. Conway in addition, points to the causative effects of government actions and fiscal health. We see there is a substantial transition from metro to suburban, and from some states to others. Importantly, there is a fleeing away from high tax areas. As employers can find skilled workers in secondary cities, this trend should continue.
We used to say “Location, location, location”. Now we might says “location employment & capital. Taken together, this indicated a rocky 2021, For more information, see recently Globe Street article.
Previous post on Austin’s near future.