Nuveen Real Estate released a new report titled, “Outlook for Real Estate: Five Themes for 2022,” which highlights five commercial real estate themes for 2022 shaped by the pandemic.
The pandemic is serving as a reminder that the digitalization of the economy poses an opportunity as well as a challenge to traditional real estate. The trend for online shopping accelerated and services that were previously considered face to face, such as health care and education, shifted to the digital world. But just as television did not kill off cinemas, none of these trends will make traditional real estate redundant.
The more social and experiential the activity, the less likely it is to move online. Restaurants, hotels and socializing venues will therefore face slower, less profound changes than shopping with its limited social aspects. The same is true for offices, where home working has led to a reevaluation of how offices are used and the socially productive functions for which workers visit them (see figure 1). We explore the global differences in the report, highlighting how offices are changing and how location decisions are in flux. The online world will also create new needs for physical space. In terms of square footage, the online sales revolution has expanded demand for warehouses, which can be thought of as virtual shop floors, to a much greater extent than traditional retail space has been lost.
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