After a seismic shock, surprising resilience
The real estate sector roars back to life
From the beginning, the COVID-19 pandemic has defied almost every economic prediction. In March 2020, stores, restaurants and offices emptied out with astonishing swiftness. The stock market tanked and jobs quickly disappeared. But what many Americans feared would be a long and devastating economic downturn didn’t happen. The economy—along with the real estate sector—bounced back in record time. Output’s already above pre-COVID-19 levels and jobs could recover to previous levels by early 2022.
To many, the property sector may look remarkably the same as it was before the pandemic. It isn’t. Some markets and sectors may have changed forever. Some buildings and other assets are obsolete, and property managers now have to imagine how they can be repurposed. Other economic hurdles include supply chain bottlenecks that slow or halt production. Labor and product shortages also bring fears of inflation, a major economic risk.
What to expect now? The virus will have a major say in that. In spring 2021, the Delta variant took hold and COVID-19 infections spiked. Many jettisoned travel plans and hesitated to eat inside a restaurant or go to a movie unmasked. Employers delayed return-to-office plans. One certainty: Companies must build flexibility and the capacity to adapt quickly to market changes.
limate change hits the property sector
The spring and summer of 2021 may be remembered as the time much of the world finally began to take climate change seriously. The theoretical turned terrifyingly real for millions around the globe. Devastating wildfires, record heat and drought plagued the US West. Massive flooding inundated New York City, Louisiana and elsewhere around the globe, including China and parts of Europe. A United Nations climate change report concluded that nations must act now to save the planet from even worse weather disasters.
What does that mean to the property sector? A lot. The sector is the largest contributor to greenhouse gasses and global warming. Buildings account for upwards of 40% of global energy use and carbon emissions. Sector leaders and investors are ideally positioned to play a leading role in muting climate change’s worst effects. But many aren’t convinced. Executives and investors often talk up environmental, social and governance (ESG) values, but many executives remain skeptical that ESG pays off in enhanced returns.
Read the full article – pwc