While many industry professionals had hoped the pandemic would be in the rearview mirror by 2022, its effects have not had the chilling effect on investment that many had feared. In fact, commercial property sales through the third quarter exceeded $450 billion for the first time ever, according to Real Capital Analytics, fueled largely by industrial and multifamily transactions. Yet even as warehouses and apartments filled up, many offices, storefronts and hotel rooms sat empty. What will it take for struggling sectors to bounce back, and will those that have been immune to the pandemic’s challenges be able to sustain growth in the year ahead? Taylor Johnson’s CRE experts weigh in on the challenges, opportunities and uncertainties that will impact market activity in 2022 and beyond: 

A return to the office has been forecasted and delayed multiple times since the start of the pandemic. So, what will it take to finally bring employees back and, more importantly, justify the commute? Whether newly reconfigured or constructed from the ground up, the office of 2022 will prioritize health and wellness, embrace in-person collaboration and, yes, anticipate the many logistical challenges associated with hybrid work schedules.

The hospitality industry’s rebound is expected to accelerate in 2022, with business travel playing catch-up to leisure. But returning guests may not recognize their favorite hotels as existing properties complete strategically timed renovations and recognizable brands experiment with new concepts – some integrated into larger mixed-use developments that offer travelers expanded amenities while shielding developers from the risk associated with standalone projects.

The pandemic laid bare crippling vulnerabilities in global supply chains, many of which rely on China and other overseas countries. Reshoring, nearshoring and “friend-shoring” are among the terms used to describe the movement of shipping routes closer to home. With extremely limited space available near seaports, those who manufacture, store and ship goods will move inland and, in many cases, grow their real estate footprints as they look to offset rising transportation costs.

In a stark contrast to the 2007 recession, private equity and real estate investment firms have been stockpiling cash during this latest period of market volatility. That’s likely to change in 2022, however, as investors look to deploy all that capital while the cost of borrowing remains low. And while some are sticking with asset classes that have flourished during the pandemic, others are giving sectors like retail and hospitality another look.

The healthcare sector was growing before the pandemic, and its outperformance over the past two years will drive investment in the months ahead, helping to backfill vacancies in patient-proximate retail corridors. Meanwhile, the COVID-19 vaccine race, along with broader changes in how drugs and treatments for other medical conditions are developed, spurred significant investment in life sciences real estate, which, despite a lack of historical data, will be a preferred asset class among institutional investors in 2022.