by Daniel P. Perruzzi, Jr.
Predicting the future in real estate is tricky in the best of times. The continuing uncertainty posed by the pandemic makes any prediction that much more difficult. However, we have learned a lot about how real estate and the real estate industry will respond, based on emerging trends.
You cannot put the toothpaste back in the tube, just like you cannot make everyone recommit to five days in the office any longer. For many industries, some tasks can be performed better in remote mode. Teamwork and higher quality collaboration tools will be the reasons for maintaining office space, but the hybrid model is here to stay. That does not mean the office goes away. On the contrary, companies will continue to assess their current workspace and upgrade it to meet the higher demand for voice/video calls and meetings that can integrate those who are remote with those present in the office.
According to a recent industry panel, there is a regional demand for 6 million sq. ft. of new lab space. Even if that’s wrong by 50%, it is still a staggering number. Look for office-to-lab conversions to continue to pick up speed, especially amongst newer, but less fully occupied, office buildings.
GMP space, where the drugs and therapeutics are manufactured, is also at a premium. Because of their demand for services and high-bay space, these will compete for suburban space with industrial uses as that market looks to expand its “last-mile” portfolio.
While we were all distracted by the pandemic, alarms have been raised on the accelerating deterioration of the environment. All of us in this industry have a role to play in creating a more sustainable future. Buildings account for nearly 70% of the emissions in urban centers. Boston is embarking on an ambitious plan to convert buildings to full electrification. Look for other cities and towns in the region to follow suit.
At the same time, a renewed emphasis on health and well-being will mean new challenges in building design.
Diversity, Equity, and Inclusion
The pandemic has exposed the economic and social inequities that afflict our society, including our industry. All the stakeholders in the real estate sector – contractors, engineers, architects, brokers, designers, project managers – have to reevaluate how they source staff, who they choose to work with, and how they procure products. The industry has already begun that effort and must continue in a positive direction. Real estate can provide tremendous, long-term economic opportunity. It is incumbent on all of us to ensure all sectors of our community can reap the benefits.
Will there be curveballs and unexpected challenges? Of course. Look no further than the current supply chain crisis and the impact it is having on construction costs. Very few saw that coming. Inflation also is a problem today that few predicted. If supply chain issues extend well into 2022 and if inflation does not abate soon, we could be in for an easing of this growth period.
Daniel P. Perruzzi, Jr., AIA, LEED AP is a principal and senior partner at Margulies Perruzzi.