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One Year Into COVID: The Light at the End of the Tunnel is Getting Brighter

March 16, 2021 by Marcus & Millichap Research Services

Numbers of March 10, 2021
Trailing 7-day average for daily Coronavirus cases

As we pass the one-year mark of the pandemic, the light at the end of the tunnel is getting brighter. The recently passed $1.9T stimulus combined with the ongoing vaccine rollout is boosting the 2021 outlook.

  • The hard-hit Hotel & Retail sectors will benefit as reduced restrictions encourage travel and shopping.
  • Apartment demand may strengthen as household formation re-invigorates amid rising job growth.
  • Strong momentum will likely continue for Industrial, though rising supply does pose some risk.
  • Vaccinated workers may accelerate the return to the Office, though the future of working remains unclear.

Economic Forecasts for 2021 Increasingly Optimistic

  • The recently passed third round of stimulus and the rising rate of vaccinations have bolstered the 2021 outlook
  • Economists are forecasting 2021 GDP growth from 5% up to 8.1%, which would be the highest growth since 1950
  • The pace of job recovery is expected to accelerate as vaccinations allow more states to loosen restrictions

Economic Recovery Will Bolster Hardest Hit Property Types

  • Vaccinations could encourage summer travel, raising Hotel occupancies and restoring some hospitality jobs
  • Reduced restrictions could help stabilize Retail, which had negative absorption of 26M sq. ft. last year

Stronger Outlook Provides New Tailwinds for CRE

  • Apartments could get a demand boost later in the year as job creation invigorates new household formation
  • Industrial is expected to maintain its strong momentum, but risk of elevated supply remains
  • While vaccinated workers can return to the Office; uncertainty remains on how quick that recovery will be

Sources: Marcus & Millichap Research Services, The New York Times, Bloomberg L.P.

Filed Under: Special Report Tagged With: Commercial property, commercial real estate, CRE, cvs deals, dollar general deals, economy, essential retailer, nnn, nnn deals, walgreens deals

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This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2020 Marcus & Millichap and Limon Net Lease Group

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