We asked a small panel of our brokers to give their two cents regarding how the commercial real estate market fared in 2021 and their predictions for 2022.
What were your commercial real estate predictions for 2021? How did they turn out?
JK: I predicted 2021 would be a busy year for office activity since many companies delayed making long-term lease decisions in 2020. Over the last 12 months, Macadam Forbes saw a 27% increase in lease activity over 2019. Lease and sales activity in the suburban office market, particularly outside of Multnomah County, was the big story of 2021.
SP: Demand for large industrial space to suit the needs of last-mile distribution and warehousing started in late 2020 and continued strong through 2021. Lack of inventory and the slow-to-market construction of speculative development intrinsically pumped the brakes on market activity by yearend. Pent up demand is strong heading into 2022.
What do you believe was the leading trend in commercial real estate for 2021?
JK: Definitely the desire for companies to relocate out of downtown Portland, specifically out of Multnomah County. Low interest rates and the availability of well-located small office buildings created many opportunities for small-sized companies to own their building and invest in commercial real estate.
RK: As for development, multi-family and industrial were clear leaders throughout 2021.
What are your Commercial Real Estate predictions for 2022?
JK: 2022 will be another busy year for companies making long-term decisions with their office space needs. The ease of Covid restrictions will drive business owners to make decisions on their “new normal” and work-from-home strategies.
SP: The expansion of industrial development outside of the Portland Metro region will be a driving force of 2022 due to the lack of Portland metro developable land.
What factors will NEGATIVELY impact commercial real estate in 2022?
JK: Higher interest rates and the Federal government pull-back on spending.
RK: Uncertainty related to COVID, supply chains, inflation, and rising interest rates.
SP: Continuing covid strains and the trend of not working in the office
What factors will POSITIVELY impact commercial real estate in 2022?
JK: The Southwest Submarket stands to continue to benefit as companies move out of downtown and purchase real estate, as long as we continue to experience relatively low interest rates and access to money.
RK: Significant capital for investment, continued industrial demand (particularly distribution)
SP: Ease of covid restrictions.