The coronavirus pandemic has had a deep impact on the world’s health and economic systems during the last several months. As a part of the economic reaction to this crisis, new trends are emerging for land development in both investment and process.
COVID-19 has slowed the land development process for many local governments with staff adjusting to working from home and/or social distancing in the office. This slowdown in government response times and permitting has disrupted the flow of equipment, materials, and labor along the supply chain that keeps the land development process in motion. Developers are continuing to adapt to new expectations for extended timelines and quickly shifting demands.
Retail has been the real estate sector most affected by the pandemic, and paying tenants of retail properties continue to struggle with weak demand and social distancing concerns. Industrial property has fared the best among commercial real estate since the pandemic hit.
Another major trend that is expected to continue possibly even after an effective vaccine is distributed is the erosion of the overall appeal of big cities as a place to live and work. Within the next three to five years it is expected that people will continue to prefer suburbs due to concerns with urban living.
Residential real estate has done better in general than commercial real estate in being resistant to the effects of the health crisis. The spread of the virus has done little to slow the need for housing and the trend towards working from home will further boost the demand for housing.
The pandemic has set up up an interesting opportunity for real estate investors who have been sitting on the sidelines between recessions. Both the commercial and residential sectors will soon see an onslaught of motivated sellers as they cope with disappearing incomes and unpaid expenses.
One previously hot investment for those developing land in urban areas was the mixed-use development, but since the pandemic hit the feasibility of these projects has been greatly affected due to their reliance on restaurant and retail commitments to get the projects initiated.
In rural areas a new trend is emerging with a rise in individuals looking to buy land parcels that are twenty acres or less. A number of historically urban and suburban dwellers are becoming interested in escaping densely populated areas due to the pandemic and civil unrest. Mini-farms and self-sufficient living on small amounts of acreage appears to be a trend that will continue for the foreseeable future.
It remains to be seen if the pandemic will have longer term effects on land development or overall trends in real estate investment. Certainly retail will not make any miraculous comeback until a vaccine has slowed the spread of the virus. Predicting how long the trend of people flowing out of densely populated urban areas into suburban and rural surroundings will last after a vaccine has been distributed will be a key question for those deciding where to put their real estate investment dollar in the near future.
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