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Nov 24, 2024

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The real estate market is one of the well-known sources of income to the economy of the United States, which contributes to a more significant percentage of its economy to ensure it thrives well. The Real estate market, specifically the commercial real estate market, contributes a very high percentage of income to the economy in the United States because, through the properties under commercial real estate, revenue is generated for individuals who operate jobs there and businesses, and again, this increases the taxes collected from the individuals and therefore directly positively improving the economic well-being of both the individuals in the United States and the government itself. Whenever the profits and rental incomes from the commercial real estate market increase, the taxes also increase, the well-being of individuals improves, and government operations are carried out smoothly. However, the COVID-19 pandemic in February 2020 affected the commercial real estate markets, seriously impacting their operations nationally. Because the commercial real estate market incorporates facilities like offices, retail rooms, and even other industrial facilities, the market was highly challenged, and all commercial facilities faced challenges nationally. Therefore, The task considers how the pandemic affected the facilities from February 2020 until the current period, where the effects of pandemics are still felt in commercial real estate. Before the pandemic, however, the retail real estate market thrived very well without any challenges, ensuring the economy's growth nationally. The facilities, including the office spaces, retail businesses, and industrial facilities, were marked by a very smooth running of their businesses and operations before the pandemic, which made them enjoy greater profits and further improved the state's growth. The real estate market sector greatly impacted the economy at that time, with other benefits to the citizens by ensuring the required goods and services were availed to them and serving to maintain the flow of goods in the supply chain. The pandemic, therefore, caused havoc in all these benefits of the commercial real estate market at the national level. Retail, Office Spaces, and the Industrial Facilities Before the Pandemic. Before the COVID-19 pandemic and its impacts on the commercial real estate market in February 2020, the demand for such real estate, including office spaces, retail facilities, and industrial facilities, was very high. For office spaces, major cities in the United States were marked with very high traffic of people seeking office spaces and others who came together and held meetings within their offices and businesses. Individuals also discussed business progress and trends within the offices before the pandemic. Individuals could be seen all over the urban centers looking for better offices within the major cities for rental, and this increased the demand, increasing the rental charges of the commercial real estate, and this improved the economy and ensured its growth. It was also the case with the industrial facilities. The industrial facilities in the United States ensure that all goods, including consumables and non-consumables, are available to the citizens and reach all individuals through the well-laid-down supply chain framework. Before the pandemic, the industrial facilities ensured supply chain flow and that all the commodities required by consumers reached them as needed in conjunction with the government. The demand for the items was also very high before the pandemic, and this made industrial facilities like warehouses, stores, and manufacturing organizations produce and store commodities in high quantities to cater to the growing demand. The demand for these things also increased the demand for new industrial facilities to ensure that the needs of the consumers were

well catered to. All this happened before the COVID-19 pandemic. Lastly,e retail enterprise facilities, the pre-pandemic period of these facilities was marked by increased demand for the products they dealt with; their operations were characterized by very high traffic of people seeking to get their products. They also experienced an improved consumer culture where the consumers had already adapted to their ways of operations and were used to consuming their products. Effects of COVID-19 Pandemic and Impacts on Commercial Real Estate Markets. The COVID-19 pandemic struck the world, causing several challenges to individuals, businesses, and even organizations, and the commercial real estate sector was not left behind. The pandemic left behind severe scars, which are felt even today within the real estate markets and the economy in the United States. The effects of the pandemic, therefore, had different impacts on the commercial real estate market facilities, including office spaces, industrial facilities, and retail facilities, where each faced distinct results and which are facing them up to date. The effects ranged from a reduction of customers in businesses to closure of the businesses in commercial real estate, hence reducing the finances collected from the properties, further leading to decreased economic growth. All the effects emanated from one major challenge, which was market disruption. Market Disruption Challenge as the Immediate Impact (2020 February- 2020 August) Market disruption was the main challenge affecting all businesses worldwide, including the commercial real estate market in the United States. The pandemic entirely disrupted the market, leaving the urban centers without people, and this even led to the closure of the businesses within the structures, affecting the landlords and investors. Market disruption was, therefore, a significant challenge and different changes within the market marked it due to orders that the government passed to control and curb the pandemic. One of the challenges of market disruption was lockdowns and restrictions. It had an immediate effect on all businesses, including the commercial real estate market, which was also highly affected by lockdowns passed by the government restricting individuals from overcrowding, mainly in the urban centers or in malls, to avoid further transmission of the diseases. Therefore, business was not as usual, and strict measures were laid down to prevent gatherings within firms and in any retailing, office spaces, and industrial facilities to contain the diseases. The lockdowns and restrictions by the government highly affected the commercial real estate markets nationally, leading to a reduction of demand for the same. The lockdowns and restrictions reduced the number of individuals in urban centers, reducing customers to commercial real estate and leading to the closure of some businesses. The second challenge under the market disruptions which affected the commercial real estate market is lease renegotiations. The commercial property tenants complained about the charges on the rooms they operated in. It involved all the facilities under the commercial real estate properties, including the office spaces, industrial facilities, and retail facilities. The tenants in these properties complained about the business environment, which was very challenging and which some of them couldn't manage to operate in. They, therefore, called for a reduction in the rental charges for the properties, leading to a challenge for the landlords. The tenants and

landlords were then forced to enter into lease renegotiations to accommodate the uncertainties during the period and ensure that the tenants continued with their businesses. The move, therefore, highly challenged the commercial real estate sector, reducing the income received from the properties and affecting the economy nationally. The other effect of the pandemic is business closures, which lead to the reduction of demand for commercial properties. Many businesses were closed down in the United States amid the pandemic because of the operating environment that it created. The government orders that restricted people from overcrowding in urban centers and business areas, including the central business districts, reduced the number of people in big cities, reducing the number of customers in several businesses. The reduction in customers, in return, leads to a decline in the sales of the companies, leading to consistent loss-making in some businesses, leading to their closure. The closure of the companies reduced the demand for commercial spaces, leading to a decline in the income gained from the retail real estate market in the United States. The other major challenge of the COVID-19 pandemic, which significantly impacted the commercial real estate market and commercial spaces, is workforce reductions brought about by the pandemic outbreak. Most office spaces, industrial businesses, and retail facilities had some employees reduced due to the problematic business operating environment, leading to reduced profits. Reducing the number of employees reduced the demand for office spaces since the number of workers left could have been higher, making them only require one or two. The idea reduced the need for office spaces because the number of employees to be accommodated was deficient. Again, the government had also ordered most workers to work from home. The order reduced the number of employees, further reducing the need for office space and directly impacting the demand for the commercial spaces, further impacting the leasing dynamics of the commercial spaces. The Impacts of the Challenges on the Commercial Real Estate Market. (2021-Current) Regardless of the severe obstacles caused by the commercial real estate market pandemic, the sector developed ways to curb them and ensure they remain in the market despite the poor business environment. Therefore, the retail real estate market sector developed several strategies that they have applied to ensure that they still maintain the economy and continue performing as they used to. The impacts and the adjustments made can be looked at considering each facility at a go, including the office spaces, retail spaces, and industrial spaces. Office Spaces. One of the many impacts on office spaces by the COVID-19 pandemic is the adoption of remote work. The COVID-19 pandemic led to most employees working from home and in remote areas and not necessarily having to go to their offices. The phenomenon occurred from February 2020 up to around September of the same year when a vaccine for the pandemic was developed, although it was not well confirmed whether it could cure the disease. Most businesses, therefore, embraced remote offices, reducing the demand for office spaces even more. In 2021, however, they started increasing the number of employees required in the physical office, although the offices were fewer. The idea of working at home, as caused by the pandemic, highly reduced the need for commercial spaces, impacting their operations and incomes even further.

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The other significant impact specifically for the office spaces was subleasing. Due to the economic uncertainties caused by the pandemic, offices started to be sub-leased, orchestrated more by the changes in the work dynamics. Most businesses hiring offices during the pandemic were forced to sublease them due to financial constraints. The idea was embraced again because some of the companies had employed the platform of working from home, and hence, they had to lease some of their offices to reduce the financial expenses as they worked from home. The idea further impacted the commercial real estate market, reducing its efficiency and income from the sector and significantly impacting the economy. This has changed, and normalcy has slowly been initiated into the market. Retail Spaces. With the outbreak of the COVID-19 pandemic, retail spaces suffered a big blow due to the pandemic's impacts on the commercial real estate sector. The pandemic led to E-commerce business dominance in the market, where individuals shifted to purchasing products from online and payments online. The move reduced the number of people in towns and customers to existing businesses. Most companies have also adopted e-commerce and sell online products, significantly affecting vacant retail spaces. It also tampered with their demand, which reduced to 28% in June 2020. Consumers shifted to that kind of business to enjoy convenience and safety. Warehouses and stores also closed down, making the owners of the properties battle to get new tenants for the vacant rooms. However, The trend has had a positive slope since February 2020, when more retail spaces began being occupied again from December 2020 to January 2021, although slowly. Currently, the retail spaces have been settled. Industrial Spaces. The introduction of E-commerce to curb the COVID-19 pandemic significantly impacted the industrial spaces in the commercial real estate market. Unlike the other areas, industrial space demand increased as consumers' needs for the delivery of products to their doorsteps also increased. There was a need for more advanced supply chain strategies to ensure that all the consumers were reached and their needs met. The industrial spaces were therefore constructed as much as possible to ensure that all the consumers were reached. Consequently, it caused a positive impact on the commercial real estate market, especially on the industrial space side. The strategy of E-commerce was embraced in April 2020, although it needs to be practiced more. Conclusion. COVID-19 has significantly impacted the U.S. economy, specifically the commercial real estate market. The impacts occurred to the sector from February 2020 up to date, where the effects of the pandemic are still being felt. Understanding these impacts assists the commercial real estate market in adjusting to the changes and helps set strategies for adapting to such changes.

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