Remote work and mobility are expected to have the most significant impact on real estate over the next year, according to The Counselors of Real Estate’s list. The group identified current and emerging issues expected to have an influence over real estate in the 2021-2022 cycle. Remote work and mobility and its influence over commercial buildings globally was named as the top issue, followed by technology and ESG (Environment, Social, and Governance).

“The pandemic was a stress test, revealing vulnerabilities, appetites, and new and increased risks,” says Michel Couillard, global chair of The Counselors of Real Estate. “These themes present themselves in the 2021-2022 Top Ten Issues, which are highly interconnected and indicative of a newly changed and further evolving real estate environment. We have been awakened to some familiar but nascent areas of importance, namely cybersecurity, supply chain, and price instability. None of these are new concepts, but in a span of months or even just weeks, we saw high profile hacks, shortages of resources like microchips, lumber and labor, and rising prices across the board.”

Here’s a closer look at the top 10 issues on CRE’s list for 2021-2022:

1. Remote work and mobility

The pandemic greatly disrupted the workplace as many employees began to work remotely—and still are more than a year later. Commercial properties may need to be repositioned as the workplace adapts to more flexible and even shareable spaces.

“As we emerge from COVID-19 into a new world replete with local and global disruptions alike, our industry has been forced to recognize that adaptability and resiliency are paramount in real estate markets,” says Couillard. “It is undeniable that the pandemic’s disruption significantly impacted human behavior in how and where people have chosen to work. Now, with an escalating return to ‘business as usual,’ and workers beginning to return to offices, landlords, and companies nevertheless are facing repositioning of the workspace and the benefit of easily adaptable and shareable spaces. …. Property owners and managers should be flexible in order to accommodate these demand-driven changes in the desired use and location of space.”

2. Technology acceleration and innovation

The Counselors of Real Estate also ranked the acceleration and adoption of technology as having the second greatest impact on the real estate industry. “The stressors were not about new tech, but about the acceptance of it,” Coulliard says. “Lockdown-driven changes in our work, the economy, in social structures, and in our personal behavior forced the industry to put any earlier reluctance aside.” Growing technology themes include artificial intelligence, machine learning, the Internet of Things, and cybersecurity, the report notes.

3. ESG at a tipping point

Environmental, social, and governance (ESG) initiatives are growing. In 2020, ESG funds more than doubled net new money intakes. “The growth in recent years is fueled by multiple drivers, including consumer shifts, regulatory requirements, trillions of dollars of wealth transferring to generation Z and millennials committed to philanthropic living, a blurring of work and societal expectations, and a full sprint to attract and retain top talent,” the report notes.

4. Logistics

“Whether it’s a port, rail line, pipeline … manufacturing facility, warehouse, farm, ranch, or grocery store, all these real estate assets are a critical segment in the supply-chain funnel that is logistics,” the report notes. “How logistics is functioning impacts the utilization of commercial real estate. Redundancy and the ability to process disruption are two key elements required to support the fast-moving, high-volume requirements of modern-day logistics in the ‘shop-online-and-deliver-to-me’ era in which we find ourselves.”

5. Infrastructure

The Civil Engineers estimates the U.S. infrastructure funding gap in 2021 to be $2.6 trillion, a 24% increase compared to 2017. “The COVID-19 pandemic, climate change, and heightened societal interest in social and economic equity have redefined infrastructure imperatives beyond the significant ongoing necessity for improved roads, bridges, airports, ports, mass transit, and other traditional infrastructure needs,” the report notes. A proposal on Capitol Hill sets out to allocate $110 billion in new spending to bridges and roads, $65 billion to expanding access to broadband, and $48.5 billion to public transit, and more. Stay updated here: NAR resource page on transportation and infrastructure in real estate

6. Housing supply and affordability

The National Association of REALTORS® and the Rosen Consulting Group released a report last week calling for a “once-in-a-generation” response to address decades of underinvestment and underbuilding in the housing market. The nation has faced a shortfall of 5.5 million to 6.8 million housing units since 2001, according to the report. Housing groups are calling on lawmakers to expand access to resources, remove barriers to incentivize new development, and more. Read more from NAR’s report on this: ‘The State of America’s Housing Stock Is Dire’

7. Political polarization

“Political friction is holding back America’s economic productivity,” the report notes. “We are squandering resources as we try to address problems that arise from the partisan divide rather than problems confronting us as common issues …. And the real estate industry’s well-being is a function of our economic growth.”

8. Economic structural change

Economic growth is mostly an unknown. As the report notes, how do we assess the real potential of the economy for sustainable growth? What numbers indicate a true trend and which are merely adjustments from the low bottom of the second quarter of 2020? Which behavioral changes made by U.S. households in the pandemic will persist? The ability for businesses to anticipate what’s next is met with challenges. For example, “even though real estate investors may reasonably expect an uptick in demand in the coming year, the ability to anticipate when occupancy and rent will rise frustrates underwriting,” the report notes. “We are observing many investors increasing their focus on property management aimed at retaining tenants and defending cash flow, while selectively seeking ‘value-add’ properties amenable to active asset management. The thinking is ‘focus on what you can control’ during this period where macro-level uncertainty is the governing headwind at the policy level in terms of the structural problems in this economy.”

9. Adaptive Reuse 2.0

The term is not new but the focus is getting bigger. CRE refers to Adaptive Reuse 2.0 as “The Neighborhood Approach.” It aims to address the challenges of what to do with defunct suburban malls and thousands of empty big-box retail stores that are surrounded by desirable and affordable neighborhoods. It requires a re-examination of suburban communities in repositioning and transforming areas that could be at risk for blight. A number of projects have been completed or are underway to help reconnect communities, prevent blight, and restore green space.

10. Bifurcation of capital markets

Debt capital markets have been volatile since the pandemic, namely public markets like commercial mortgage-backed securities, mortgage REITs, and agencies such as Freddie Mac and Fannie Mae. “Mortgage REITs took a significant hit early in the pandemic, with some recent recovery driven by restructuring credit lines and paying down credit facilities that experienced margin calls,” the report notes. Still, the “market continues to be flush with debt capital liquidity, despite property type and market uncertainty. Looking out to the remainder of 2021 and into 2022, performance will dictate the amount of distress and losses, and risk management should dictate markets, property types, leverage, loan structure, and pricing for mortgage debt. The next year should also tell us if commercial real estate debt was too rich and whether perceived risk underestimated where pricing should have been.”

Learn more about each of these issues: Cre.org/topten

©National Association of REALTORS®
Reprinted with permission

Virtual land in the online world of Decentraland grabbed international headlines after recently selling for more than $900,000, a record purchase on the platform, the Decentraland Foundation announced.

Ownership of some virtual land is bought and sold with nonfungible tokens, a type of cryptocurrency that records the ownership status of digital items on a blockchain, a form of digital ledger, Reuters reports.

Blockchain-based real estate in virtual worlds has surged in price as part of an NFT market frenzy that began earlier this year, Reuters reports.

The virtual land in Decentraland was the most expensive purchase of land using NFTs as currency, Reuters reports citing DappRadar, a website that tracks NFT sales data. Decentraland transactions are based on the Ethereum blockchain, according to the site’s frequently asked questions page.

Republic Realm, a digital real estate investment fund owned by U.S. investors, purchased the virtual land in Decentraland. The virtual land is comprised of 259 units or panels of land. It represents 66,304 virtual square meters, or 16 virtual acres. It’s the largest Decentraland purchase in virtual size.

In virtual worlds, users purchase land to show off their NFT art collections, walk around with friends, visit buildings, or attend events.

Earlier this month, a unit of virtual real estate sold for about $650,000 in the blockchain-based virtual world called The Sandbox.

Many remote workers have found sections of their home suddenly on display during videoconference calls, which has motivated them to spruce up their nest, a new survey shows.

Seventy-three percent of Americans say they cleaned or tidied up their homes prior to virtual Zoom calls, according to the survey from Cinch Home Services on how the pandemic has changed Americans’ cleaning habits. However, 18% of respondents say they felt some house shame and used a digital background to hide their untidy home.

Those who cleaned their homes say they felt more productive at work after doing so. About 68% of respondents say cleaning increases their feelings of productivity, 65% say it makes them feel more in control, and 58% say it’s motivating.

Many households were motivated to clean and declutter their homes during the pandemic. Sixty-four percent of respondents say they intentionally cut back on purchases to stall clutter. Seventy percent say they’ve going on a cleaning spree since the beginning of the pandemic, according to the Cinch Home Services report. Nearly 45% of consumers say their spaces are much cleaner now than they were pre-pandemic.

More than a third of Americans say they have found at least one error in their credit report, according to a new study from Consumer Reports. The publication asked more than 5,800 study participants to get a copy of their credit report and check it for errors between Feb. 1 and April 1. A wide range of mistakes emerged.

For example, 29% of respondents uncovered errors with their personal information, while 11% found mistakes regarding their account information, which could damage their credit score, Syed Ejaz, a Consumer Reports policy analyst, told CNBC. “Unfortunately, folks sometimes find out [about these errors] way too late—when they are in the middle of getting a loan for a new house or car,” Ejaz said. “That is why it is really important to make sure you check your credit report and assess it for accuracy.”

The Consumer Data Industry Association, which represents the major credit reporting companies, has called the Consumer Reports investigation “completely false and misleading.” The CDIA claims the credit reporting industry has a 98% accuracy rate on credit profiles and cautioned against reading into the study’s conclusions because it’s based on a non-empirical survey of consumers.

Still, financial experts recommend that consumers frequently monitor their credit reports at AnnualCreditReport.com. Credit reports from Equifax, Experian, and TransUnion are usually available for free once a year. However, the three firms are offering free weekly credit reports through April 20, 2022.

Consumers should contact the reporting firms directly if they find any mistakes in their credit report. The Federal Trade Commission provides a sample letter you and your clients can send to credit bureaus to dispute errors.