2020 Year End Market Report
As with most sectors of the economy, the COVID-19 pandemic profoundly affected commercial real estate during most of 2020. The emergence of vaccines promises to dramatically change economic behavior during the coming year, assuming “normal” life is restored for most people. This welcome development prompts two big questions. What shape will the curve of the recovery take for commercial real estate? And what lasting shifts in the use of commercial space—particularly office and retail space—might result from the pandemic? Since we don’t have a crystal ball, we will be watching the markets very closely through the coming year with these questions in mind. 2020 was a challenging year for most tenants and property owners on the South Coast, and for a few submarkets the past nine months seemed to unravel much of the growth of the previous nine years. However, there were some surprises and bright spots in the market as well. Heading into 2021 there is cause for optimism, and there are opportunities for those in a position to pursue them. Here is an brief summary:
• Annual transaction value decreased 5% for sales and 47% for lease consideration, compared to prior 5-year averages.
• Sales activity rebounded dramatically in the second half of the year, while leasing did not.
• Five office property purchases by out-of-area investors generated half of the total sales volume.
• Inventory for sale increased 19% while available space for lease expanded 26%, year over year.
• Given the economy, demand has proven surprisingly resilient in most submarkets.
Read the full 6-page report here: 2020-Q4-HayesCommercial.pdf