May 21, 2020 - Economy

Retail rents suffer most from coronavirus-driven plunge

Reproduced from Urban Land Institute; Chart: Axios Visuals

This year's real-estate outlook is bleak, but commercial property rents are expected to improve over the next two years, according to the Urban Land Institute's annual survey of real estate economists and analysts.

The state of play: Brick-and-mortar retailers, which were already shrinking before the pandemic, are suffering across the board. Meanwhile, e-commerce is rapidly increasing its market share.

  • Apartments are necessities, and rent collections haven't dipped as much as expected — yet. There will likely be a slowdown in building new multi-family projects.
  • Office demand is expected to improve over time. Even if more people decide to work from home, social distancing could require companies to lease more space to accommodate workers.

The bottom line: The big question that will determine how quickly rental rates bounce back is whether the crisis will prompt people to swap a city lifestyle for a more spread-out suburban one.

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