Amid the ongoing pandemic, the real estate industry has shown significant opportunity and resilience.
Hospitality has been sustained by the revival of leisure travel, as customers once again embark on vacations. While corporations still exercise caution over business travel, signs of the sector’s resurgence emerged late last year and in early 2022. The capital markets remain forgiving to hotel operators, with favorable loan terms and limited distress.
Commercial office space, meanwhile, continues to evolve following pandemic-induced shifts in work behavior, and the future of office space is taking shape. Sun Belt properties have gained in popularity due to demographic shifts that include an emphasis on favorable lifestyles, as well as the importance of technologies that promote health and safety; tenants elsewhere in the country are retrofitting existing offices to make them more flexible. Excess office capacity is being converted to space for other sectors, such as residential, industrial and health services.
The housing sector remains competitive, helped by robust demand outpacing the supply of new and existing homes. Materials supply issues continue to burden the construction industry, and the subsequent escalation of material prices has helped to fuel a nationwide increase in home prices.
- Business travel, while recovering, has suffered amid pandemic restrictions.
- Rising room rates nationwide are a worrisome trend consumers are watching.
- Labor presents significant challenges to hospitality, and new incentives are important.
- Class A offices in the Sun Belt are gaining in popularity, reflected by higher prices.
- Flexible offices are emerging amid an uptick in remote and hybrid work.
- Conversions to industrial and residential space will continue to absorb excess office capacity.
- The housing market, while strong, is hampered by limited supply.
- Home affordability is set to be challenged by rising interest rates.
- Builders continue to be constrained by the limited supply of materials and their rising costs.