No one in Minneapolis has to be told how difficult 2020 has been. Of course, we’re not alone in our struggles. The pandemic has forced unprecedented changes, with shuttered offices and public spaces silencing downtowns across the nation.
After an utterly unpredictable year, analysts, journalists and stakeholders are nevertheless trying to figure out what 2021 might have in store.
A recent news article identified five emerging commercial real estate trends:
Public health has been front and center for months and will stay there. As the U.S. transitions from lockdowns to various stages of reopening, the commercial property community will have to convince the public that their spaces are safe.
In existing structures, that means more than personal protective equipment. Many owners and tenants have made or planned structural changes that include touchless access technology, improved HVAC systems and more.
Projects in development include those features, while incorporating social distancing into floor plans and making outdoor space a part of work areas where possible.
Commercial real estate owners are examining contracts to determine responsibility for the changes.
Boilerplate in commercial real estate agreements has become more important than ever, as parties sort out a variety of issues, including rental and lease payments, maintenance, closure, etc.
Agreements containing “acts of God” clauses have been used by some tenants hoping to justify default, while others rely on common law doctrines that are often hard to prove. The outcome of litigation involving these matters in 2021 and beyond will a lasting imprint on contract interpretation.
Government revenue issues
State, county and city governments also suffered in 2020. According to a National League of Cities survey, three-quarters of municipalities are making unavoidable cuts and two-thirds have delayed or canceled capital expenditures and infrastructure development.
It remains to be seen how the various levels of government use their taxing powers in reaction to the smaller revenue streams.
Evictions and foreclosures
Many states used emergency powers to put in place moratoriums on evictions and foreclosures – measures that have now mostly expired in the commercial world.
Many businesses are struggling to make rent or lease payments, which means commercial real estate owners can, in turn, struggle to make mortgage payments.
The result might well be a rise in evictions and foreclosures in 2021.