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Two-thirds of real estate professionals surveyed believe that fewer than 75% of workers will come back to the office at least three days a week in 2022, and that the need for more office space will likely decrease by up to 15% in the next three years.
Property values have rebounded to pre-pandemic levels in record time, but Covid-19 has left a lasting for-sale and rental housing and commercial buildings, according to a PwC-Urban Land Institute report.
The top 10 markets in emerging trends in real estate according to the report are:
- Nashville, Tennessee
- Raleigh/Durham, North Carolina
- Austin, Texas
- Tampa/St. Petersburg, Florida
- Charlotte, North Carolina
- Dallas/Fort Worth, Texas
Meanwhile, on Realtor.com’s list of top housing markets, Austin, Texas came in second, where the median home list price was $520,000.
Some of the trends highlighted in the PwC-ULI report are:
The housing affordability crisis continues. Housing affordability worsened during the pandemic as home prices and rents barely paused during the brief recession and then quickly grew as the economy reopened. Costs of both for-sale and rental housing are rising much faster in secondary and tertiary markets as people fleeing expensive “gateway” metropolitan markets bid up home prices in the smaller destination markets.
Housing affordability is crucial in creating a diverse workforce and deliberate inclusion efforts that help to drive equitable outcomes that can lead to broader economic development, which benefits everyone, according to the report.
Working from home may mean less commercial office space is needed. Before the pandemic, it was rare to see many U.S. residents working from home full time. However, the number of people working from home increased during the initial lockdown and is expected to maintain momentum among office workers. The report states that almost two-thirds of real estate professionals believe that fewer than 75% of workers will come to the office at least three days a week in 2022.
Industry leaders predict the need for office space will likely decrease between 5% and 15% within the next three years. However, office tenants are looking for new and innovative ways to redesign the space they have in hopes of providing new ways of working.
Permanently remote workers may relocate. The volume of highly paid office workers moving away from their workplace has been relatively limited. Many workers likely held off relocating as they awaited callbacks to their employers, according to the report.
But there is an expected increase in employee moves as firms delay the return day to work or make remote work a permanent option. This aspect can also create more suburban growth in the future, particularly in the Sun Belt region. Sun Belt cities occupy the top five places in the homebuilding prospects ratings, the report contends.
“The impact from the pandemic was less than the real estate industry expected at this point last year,” said Byron Carlock Jr., the real estate leader for PwC in the U.S. “Now the industry should use its good fortune toward both preparations for continued uncertainty and making strides toward environmental, social and governance improvement.”
Due to the increase in remote work, U.S residents are seeking larger homes with more space. New American houses are among the largest in the world and their size-per-resident has nearly doubled in the past 50 years.
The report includes proprietary data and insights from nearly 1,700 leading real estate industry experts, and explores how the property sector has seen encouraging and unprecedented recovery from the Covid-19 pandemic.
For more information from this report click here.
Andre Claudio is an assistant editor at Route Fifty.