Discerning The Changes That Will Live On After 2020
STORY INLINE POST
Q: What real estate trends have emerged in the aftermath of the pandemic?
A: We have worked to identify the most important trends that have defined the last 12 months, as well as analyzing previously existing trends that were accelerated during this time period and new trends that emerged as a result of the events that took place within this timeframe. We have also worked to distinguish short-term from long-term impacts. There are five points to highlight.
The first is perhaps the most important: redefining the objectives and purposes that drive construction projects. This change is so important and all-encompassing that even more time is needed to accurately measure its impact. The second point deals with a new perspective on the internal climate characteristics of structures. This includes factors like air quality and circulation. The impact of this approach appeared to be short term at first but it seems that it is here to stay. The third point is the impact of AI technologies, which include automation along with a whole slew of technological applications. Previously, the real estate sector did not welcome some of these new technologies, or at least it had trailed behind other sectors in their application, but now it is fully immersed in these innovations. The fourth point is related to the second point, which is the question of wellness. However, the second point of internal climate is tied to physical health, while wellness is a much broader concept that also incorporates mental and emotional health, comfort and design, which responds to new and healthier perspectives on work-life balances, and has resulted in the growth of wellness-oriented residential, mixed-use and commercial real estate projects. The fifth point deals with a renewed interest of real estate investors in ESG factors, such as a sustainable building’s design and construction, attracting more tenants.
Q: How did your service portfolio change as a result of the events of the last 12 months?
A: Many of our services were integrated and rebuilt into larger packages. We went from being mostly intermediaries in the transactional processes of the sector to being an integrated service provider focused on property management and leasing processes, along with a larger property valuation division and a larger project management and construction division. We also developed a division focused on hotels and tourism. In general, we have been trying to focus more on commercial and sustainability consultancy services than transaction supervision. Today, we have more options to offer our clients, and a more integrated turnkey approach to their operations, should they require it. This includes analyzing their chain of decision-making processes to uncover opportunities for real estate optimization, efficiency, and general improvement. Our divisions can work together or separately, as they are highly specialized in their own particular spectrum of services.
Q: What advice do you provide your clients in regard to industrial park projects?
A: The success of the industrial park subsector can be credited to the ways in which the pandemic changed the country’s distribution networks. This led to an increase in demand for industrial space that responds to the needs in storage, logistics and distribution. We tell our clients that we will need to distinguish between spaces meant for manufacturing and spaces meant for logistics, instead of integrating them in the same “industrial parks'' category. This is because these two markets are going to experience different degrees of development and will eventually attract different types of clients. In some cases, the development of industrial parks that can satisfy both markets will be convenient. However, this will depend entirely on the location and connectivity resources available where these projects are being developed. Developers and contractors that can design and build these highly specialized, hybrid spaces will also become a market of their own. In other words, we expect these markets to develop independently.
The industrial parks segment had the most success in 2020 due to a variety of factors, such as a larger tendency toward nearshoring, redundancy and larger stocks of both raw materials and components used in industrial and manufacturing processes. Developers are looking to offer a higher degree of proximity to their customers. The USMCA also played a part in creating a new demand for more storage warehouses. What is also interesting about this development is that it appears to be quite localized to Mexico; it does not necessarily translate to other contexts globally.
Colliers International is a real estate services company with operations in 68 countries. The company manages 2 billion square feet and has over 17,000 employees across the globe.