The COVID-19 pandemic has forced many aspects of life to change drastically and rapidly. Many of these changes and their effects will be felt for years to come. Innovation has become necessary to adjust to the changing market.
The pandemic has led to a severe shift in property use, requiring outside-the-box thinking and giving way to some amazing innovation, alongside new ecologically sound trends. While some facets of business such as office spaces, agriculture, and retail have been forced to change out of necessity, many markets are investing in innovative new practices that may forever alter our market.
Much of retail has been forced to shift to ecommerce, but with increased demand for sustainability and a demand to return to normal life, how will commercial properties innovate to cope with the huge losses that shutdowns have caused?
Virtual offices
Remote working was mandated with the onslaught of stay-at-home/shelter-at-home orders. Pre-COVID, physical office spaces were hotly contested, with companies competing ferociously for prime space in advantageous major urban areas. These physical spaces brought with them issues like commute time and traffic build-up.
The shift to working from home surprised many with not only how quickly and easily the change happened, but how effective it was as well. According to McKinsey research around 80% of workers report enjoying working from home. Workers are freed from long commutes and bothersome travel, with a better work/life balance and more free time for leisure and self-care. It remains to be seen how the shift impacts productivity over the long term.
Many expect the trend to continue permanently and even after the vaccine has been widely administered signaling a potential end to the pandemic, a return to physical offices can only be cautious at best. As per the CDC’s instruction to fully vaccinated persons, the spaces will still need to be socially distanced, which means redesigning formerly congested office spaces and maintaining safety measures for elevators and other closed in tight quarters.
The answer for some businesses will be virtual offices. Along with the personal benefits to workers, virtual offices cut down cost greatly (see previously: expensive commercial real estate), meaning that workers can work from anywhere as long as they have an internet connection, and have increased efficiency.
Vertical farming
The already massive but still growing need for sustainability became even more clear during the pandemic as supply chains were disrupted. This was combined with the unpredictability of climate patterns threatening the availability, stability, and price of fresh food.
While laborers couldn’t tend to crops and farmers couldn’t get produce to the market, eateries, schools and stores were shut, and consumers were forced to find other ways to get food like ordering online or trying out a click and collect.
People becoming more conscious about the sources of their food means that many forego options that did not bear some form of sustainable labelling. Additionally, the general public consensus is that packaging must be more eco-friendly as well. Rather than single-use plastic, compostable or biodegradable packaging is preferred. There is also demand for eco-friendly herbicides and pesticides, and better use of land for agriculture.
Vertical farms, where crops are grown up instead of out, offer a fairly simple solution to many of the problems that the pandemic has highlighted. Most valuably, they save space. Because commercial real estate can be so expensive, this is a highly efficient use of land and is becoming a trend nationwide.
In addition, vertical farms can be located far closer to or even within major urban areas. This reduces transportation costs and carbon emissions greatly, as well as being energy and water efficient. The produce is also cheaper, fresher and more easily available.
The development of vertical farms has also allowed for careful control over the cultivation of crops, with herbicides and pesticides being rendered unnecessary as the farms are usually in buildings. There are also choices for using soil or hydroponics. The quality of the produce is consistent, the farms are modular and expandable (and sometimes even mobile) and there is also less human contact thus further mitigating contamination.
With most vertical farms able to control irrigation, lighting, nutrients, pH and CO2 levels, air humidity and temperature, these sorts of farms are the future of agriculture. They work incredibly well hand-in-hand with AI, big data, and other intelligent controls.
The effect on Commercial Real Estate
It is clear that commercial properties are evolving to keep up with ever-changing demands and needs as the world progresses and cycles through different historical events. The uses for commercial real estate, or CRE, may alter, but the need to invest never does. People will always need CRE. The only things that change are how well they can maximize their use of it as new technology and innovations come along.
Now more than ever proper guidance in investing is important to capitalize on a changing market. At Fortress Equities, we have the knowledgeable staff to help you make educated investment choices. Reach out to us today for more information.