The hotter than hot market might show signs of cooling off in 2022 — with dwindling inventory a chief concern among several industry experts.
That start of a new year comes with optimism, with feelings that anything is possible and change is on the horizon.
But the reality, once the champagne wears off, is the new year is just a designation on the calendar, a continuation of the previous year. That designation, though, is a powerful one, allowing for both reflection and for a look forward.
With that in mind, the Business Observer reached out to five commercial real estate experts in the region with two questions for 2022. The first question: As we head into the new year, what’s your biggest concern and what can you do to address it? The second question: What are your projections/predictions for the market in 2022? Edited excerpts:
Danny Rice, executive managing director, market leader central and west Florida at Colliers, Tampa
Concerns: There’s a couple of concerns. I’m not sure I’d call them major concerns, but they’re things to watch out for. Of course, the pandemic is always the first one top of mind to me and to our clients and to, I think, the entire industry. Especially with some of these new variants. I think the pandemic is going to be an ongoing concern we’re all going to have to continue to pay attention to. And the various influences that can happen, whether that’s government regulation, restrictions that get put back into place; whether that’s health issues for our own employees, for clients, for other businesses that are out there.
Kind of similar, almost segueing on that same topic of concern, is there is a labor challenge out there. Hiring is becoming harder and harder. So, yes, we have great growth happening in Florida, but if you don’t have the employee base or if you don’t have individuals that can get hired to take a new retail, restaurant job at a new location, if you don’t have the people, you can’t open. Inflation is probably another one. It’s talked about often. It’s going to put pressure on how the feds are going to handle that. Are interest rates going to tick up after being very low for a long period of time, which will affect investment activity and buying power? And the last one I would say is just overall supply chain challenges. But I think that will start to work itself out over the next six to 12 months.
Projections/Predictions: I think that’s a fun one when you think of ’21 heading into ’22. I think, generally speaking, the first half of ’22 is going to feel like the second half of ’21. I think the activity level is going to stay strong. But I think we also have to be realistic. Where ’21 was a little bit of a catch-up game for a lot of people — for investors, for tenants, for businesses where it’s kind of like a catch up for the delays that happened in 2020 and getting through the shock and awe of the pandemic. Once we got through the 2020 period, there was a little bit of catch up, which brought ’21 higher activity than what would normally be the case even in a good market.
So, we might see in the second half of 2022 a slowdown. But it’s not necessarily a slowdown, but a leveling off of activity. As businesses get caught back up with their growth plans, they’ll get in a more normal state of mind. So, I think we’ll see a very strong market in 2022 through all asset types. The one resurgence that’s going to continue to happen is office space. The work-from-home that has happened in the past 12 to 24 months is starting to shift back to where employees are beginning to come back more and more to the office. I think a good prediction there is that we’ll see that growing further.