While the pandemic continues to evolve, our team and clients are beginning to recognize a sense of more solid footing and a shift from crisis management to steady-state business management, albeit in a new environment. We now find ourselves renewing conversations about development and acquisition work and considering how to step up as industry leaders to better support our clients and communities and drive change in the commercial real estate industry.
Any major crisis at the national level has reactionary effects on our nation’s housing industry. As we all learned following both 9/11 and the housing crash of 2008, changes already in motion are accelerated during such a crisis. As COVID-19 has rippled its way throughout our country, we find ourselves examining housing demand changes and the potential impact on future development strategies.
More Commercial Real Estate Changes Ahead
In recent weeks, one area of focus has been considering the influence of Generation Z. The quarantine has provided me ample opportunity to gather first person evidence from my 17-year-old son and his friends. They express a more earnest desire for outdoor space—the chance to build a campfire in the backyard, shoot basketballs in the driveway, or hang a hammock at the local park. They talk about the difficulties of being locked in a small house with others during the colder months and have a new appreciation for the family dinner table. I have also noticed them recognizing the importance of defined spaces—a place to do schoolwork and the ability to get away from that space, to take on projects and be creative.
In addition to this, they are also more keenly tuned into the importance of social interaction of any kind—not just for themselves, but with regards to a true sense of responsibility in caring for others. Inside all of these reactions and lessons they are learning, we should consider the future of housing industry trends, particularly because the choices they make moving into the rental market have the potential to propel our industry far more significantly than what Millennials did after the 2008 housing crash.
We may see a faster move from multifamily rentals to homeownership than what we see from Millennials, who seem only now to be buying homes as they get married and begin to create families. In many cities, including Milwaukee, we have seen a long-standing single-family housing shortage for young families purchasing their first home, both in terms of space and school availability. Furthering this gap are insufficient opportunities for empty nesters to leave their single-family homes and remain in independent, affordable housing of their choice.
Of course, when it comes to understanding what the future may hold for the multifamily market, this is fairly long-range, particularly as the older portion of Generation Z is only just starting to enter the workforce. In the nearer term, we are thinking about how COVID-19 might spur repurposing opportunities, such as turning Class B hotels into multifamily or senior community housing. Of course, the affordable housing crisis is one of the most pressing and immediate issues our industry faces. The need to develop and leverage scalable solutions for capital infusion and housing development has never been more crucial.
All-in-all, there is much to consider. Commercial real estate is a complex industry, which is what draws us to the work and keeps it exciting. Within all these conversations and considerations, our primary goal remains to understand how these changes will impact our clients and where we can help them make the best decisions for long-term success. As a lending and mortgage advisor to our clients, we are constantly working to stay ahead of the curve so we can support them and their communities as we navigate these shifting demands together.