The demand of niche market real estate, such as automation/automation logistics and cold storage, will dramatically increase as a result of Covid-19.
Given the short-term negative effects of Covid-19 on the real estate market, CBRE offers a positive forecast of the types of property that can benefit during this challenging period.
Demand for cold storage will increase sharply
E-commerce will be a driving force for logistics development in 2020, when traditional shopping activities are restricted and criticized due to Covid-19. In the wake of the outbreak, online sales have increased and accelerated multi-channel retailing. Now is the time to supplement warehouses around large urban areas so they can meet the sudden increase in demand for the last mile delivery.
Cold-storage real estate is considered a new trend, and the increase in sales of vegetables and fresh food online is creating a huge rental demand. This niche market is expected to benefit in the long term from the effects of behavioral-pattern changes brought about by the disease.
Automated logistics will grow strongly
The application of automation in logistics spaces is also expected to increase as suppliers seek solutions to reduce their reliance on human resources and prevent future disruptions caused by Covid-19 and similar scenarios. This will change the way operators set up and build their distribution centers and warehouses.
For logistics facilities that still have to maintain a large number of employees, hygiene and disinfection measures need to be improved. The development of technologies such as drone equipment and automatic-navigation equipment will increase as they can be used in isolated and no-contact areas. JD.com, for example, made deliveries with drones in Hubei province for two weeks during the outbreak.
Timely adaptation is also expected to play a more important role in managing the logistics sector as many suppliers encountered problems meeting the spike in demand in the weeks following the outbreak. In China, Alibaba's multi-channel retail chain, Hema recruited temporary employees from the restaurant industry to help it address the spike in online orders.
Flexible offices will be favored
CBRE believes that with the outbreak of the disease, a flexible workspace model will be tested for feasibility in many markets. In recent weeks, governments and private organizations in Singapore, Hong Kong, Macao and even in several cities in China have been forced to recommend working from home to minimize the spread of the disease.
The use of flexible office space will be adopted due to the need to ensure extraction density to limit the spread of contagious pathogens. At the same time, employees will become more adaptable and an increase of flexible workspaces will follow after the outbreak of this disease.
Besides, buildings with sustainable and health-friendly properties related to air quality, ventilation and environmental features that enhance personnel comfort will attract more demand in the long term.