Our current economic atmosphere screams UNCERTAINTY, there are so many factors in play today that have never been in the game before which makes it hard to find harmony among economic outlooks. This is mostly because each industry within commercial real estate is so different and subject to completely different market conditions. For example, hospitality outlooks are generally pessimistic, restaurant space outlooksFollowing demographic trends have become increasingly important in this atmosphere.

In regards to hospitality, there are markets that are considerably strong and can provide safety in an overall economic downturn. Vacation rentals along with select service and economy hotels in drive-to-leisure markets hold strong stability. During COVID-19, hospitality assets in this class in popular destinations and in states with loose COVID rules stayed relatively flat while other hospitality assists around the US severely suffered. When economic hardship hits the middle class, full service hotels will suffer as people may not be able to afford them anymore and they’ll turn to select service and even economy options. Then when plane tickets are too expensive to get across the country, they’ll drive to a closer destination.

While the hospitality industry has suffered, there is a silver lining. The shift towards local tourism and the rise of staycations have resulted in a boom for vacation rentals and economy hotels in drive-to-leisure markets. This trend is expected to continue as more people are becoming comfortable with the idea of traveling locally and exploring their own backyards. As such, investing in properties that cater to this market segment could provide a safe haven in these uncertain times.

On the contrary, the restaurant industry presents a more positive outlook. Despite the initial shock from the pandemic, many restaurants have shown resilience and adaptability. They have quickly transitioned to new business models – focusing on takeout and delivery services, and leveraging technology for contactless dining experiences. This has created an increased demand for commercial real estate that can accommodate these evolving needs.

The multifamily sector, however, paints a varied picture. While the demand for affordable housing remains strong, luxury apartments in urban areas are experiencing higher vacancy rates due to the rise of remote work. This shift towards remote work is causing a migration from city centers to suburban and rural areas, leading to a change in the dynamics of the multifamily sector. Investors need to be mindful of these trends when making investment decisions.

The current economic climate calls for a strategic approach towards investment in the commercial real estate sector. By staying informed about industry trends and demographic shifts, investors can navigate through the uncertainty and make sound investment decisions. Whether it’s capitalizing on the rise of local tourism in the hospitality sector, catering to the evolving needs of the restaurant industry, or understanding the changing dynamics of the multifamily sector, opportunities abound in this challenging economic landscape. are generally optimistic, and multifamily is all over the place.