Recovery for Economy and Commercial Real Estate Backloaded to Second Half of 2021

Recovery for Economy and Commercial Real Estate Backloaded to Second Half of 2021
Sarah Borchers…
Jan. 22 2021


Nareit’s 2021 outlook sees aggregate household sector in stronger position than in prior recessions.


While an economic recovery is expected to take hold, benefitting commercial real estate in its wake, any significant improvement is likely to occur starting in the second half of 2021, according to Nareit Senior Economist Calvin Schnure.

Speaking on the REIT report, Schnure highlighted some of the key themes of Nareit’s 2021 Outlook for REITs and Commercial Real Estate.

Schnure noted that “we’re going to see some strengthening of the economic recovery and that’s going to benefit the commercial real estate markets quite a bit.” However, the improvement will really be driven by vaccines bringing the pandemic under control, which is not expected before the second half.

Schnure stressed that, unlike in previous recessions, the economy and commercial real estate suffered an external shock. At the same time, despite widespread job losses, “the aggregate household sector is in a stronger position than it was at this point in the previous couple of recessions,” he said. Schnure added, “that’s going to give us some hope that once the pandemic is under control, we’ll see a bit more of a robust recovery in the second half of this year and into next year.”

Meanwhile, the economy is undergoing a two track recovery, with sectors that are highly exposed to the pandemic operating well below capacity. “That’s where all the weakness is concentrated,” Schnure said. Other sectors however, such as data center, cell tower, and industrial REITs, are operating at full potential, and in some cases are even above where they were a year ago, he noted.

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