A recent article in the National Law Review comments about the whirlwind 20 months for commercial real estate (CRE), which was hit particularly hard by COVID-19. According to a recent report “The pandemic created the worst recession the office sector has ever faced — leaving property owners to seek out new ways to entice tenants, navigate changing lease structures, and manage any number of other COVID-related issues. Moreover, COVID-19 has caused many observers to challenge and question the fundamental way we work and, more importantly, where we work. On the flip side, despite the pandemic’s persistence, other areas in CRE have proven remarkably resilient. As the economy continues to recover, PwC data shows that an enormous amount of investment is surging into real estate.”
The challenges of CRE will surely continue into 2022, presenting new challenges, opportunities and uncertainties. Many tenants want flexible and short-term lease structures. However, one study shows that more than 75 percent of new leases signed in the first half of 2021 were for terms greater than four years, and 25 percent were for terms of 10+ years — percentages consistent with pre-pandemic levels. The article states “The full impact of COVID-driven changes in working and space use may not be realized until larger, existing leases come up for renewal or until there is clarity around the extent to which remote working will effect a permanent change in office space usage and, ultimately, demand.”
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Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should not rely solely on this information. We encourage our clients to work with a lawyer experienced in commercial and/or residential real estate matters as they can be complicated and confusing
