Never the Same? Report Looks at 2020’s Impacts on Retail, Hotel and Logistics Properties
2020 has been a fast-moving, disruptive year. In fact, the pandemic has acted as “the ultimate accelerant to corporate transformation, speeding up many trends evident before the pandemic and pushing organizations toward change,” commercial real estate company JLL notes. “CEOs are now realizing that their businesses may never operate in the way they did prior to COVID-19.”
JLL released a report today that puts some perspective on changes underway in various segments of commercial real estate. Here is what the firm had to say about the retail, logistics and hospitality sectors.
A recovery that buoyed this sector through the summer months appears to have stalled because of a Q3 resurgence of COVID-19 in many regions, JLL observed. Retailers are responding by embracing omnichannel platforms, and store pickup services, including fully automated stores. “Major retail markets are expected to see more churn in occupiers as weaker operators downsize their store portfolios,” the firm observed, “although well-capitalized operators and new market entrants are selectively looking for expansion opportunities.”
This sector is doing better than others, thanks to the boom in e-commerce. “The rapid growth of e-commerce across the globe, the ongoing realignment of supply chains and increasing requirement for last-mile warehouses is likely to continue to support strong demand over the longer term,” JLL said. “Encouragingly, the need to decarbonize logistics from both a transport and buildings perspective is now becoming more widely recognized, which is leading to the wider adoption of more sustainable practices.”
Hotels and Hospitality
JLL observed that hotels and hospitality had suffered a “profound, adverse impact” from the pandemic. It predicted a further shakeout might be in store for the sector. “As yet, distressed activity has been very limited globally as many owners are still benefiting from forbearance periods and government assistance, which has spurred an ‘extend and pretend’ phase,” JLL said. “Nevertheless, a pickup in distress activity is anticipated as we get closer to the end of the year.”
Other trends noted in the report included:
- Last-mile logistics facilities are on the rise as online retail grows.
- Retail facilities are increasingly being converted into logistics facilities in dense urban areas.
- Warehousing design is becoming more “human-centric.”
- Demand for cold storage is increasing, especially in the food and beverage and life sciences sectors.