Despite the post-COVID-19 pandemic’s economic collapse, the US economy is recovering faster than expected. Business leaders and academics polled by The Wall Street Journal expect gross domestic products to increase at an annualized rate of 23.9% in the third quarter. Further, economists suggest worry of a second recession is decreasing substantially.
The largest concerns ahead, relating to the recent reduction in federal jobless benefits which could dent consumer spending in the months ahead. Reducing benefits concerns president Trump. Last month Trump signed an executive action to provide an extra $300 a week in federally funded jobless benefits. Nonetheless, the extra benefit payments fall short of the extra $600 a week in place from April through July. Still, most economists remain hopeful that the economy will continue to expand.
What does a faster than expected recovery mean for the Chicagoland commercial real estate market?
While the forecast remains bleak for much of Chicago’s central business district, the Chicago metro area remains healthy. As more families continue to exit the city, traditional wisdom that downtown office and retail space is recession-proof is definitively untrue. Still, there are countervailing positive trends that a faster than expected recovery could intensify.
First, as more people leave urban areas due to economic, societal, and health fears expect growth in the suburban office market to accelerate despite the pandemic. Especially for smaller office leases and corporations moving towards the “hub and spoke” model, the COVID-19 pandemic may potentially drive a much greater suburban office footprint.
Second, even with a decline in transactional activity for commercial real estate, the industrial real estate market continues to weather the storm. Logistical demand fueled by e-commerce and the needs of a post-COVID-19 world means industrial vacancy rates will remain at all-time lows.
Therefore, this could be the ideal time for your business to enter the commercial real estate market. In spite of the increasing economic recovery commercial real estate values remain attractive. Occupiers looking to get into the industrial market, this may be as good a time as any as supply continues to dwindle. However, for businesses looking at entering the suburban office market this could be a once in a generation opportunity to lock in a low-cost long-term workspace.
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