At the beginning of 2020, the Elegment Land Team was concerned. We were concerned that such a global pandemic will bring down the entire market like the 2008 Financial Crisis. We held a conservative approach in land acquisitions in the first half of the year. But, the market evolved far beyond our imagination. It developed in the opposite direction of our expectations. Our land sales in 2020 have increased by five times compared to 2019! For two months we sold out all our land parcels. Our e-commerce store became out of stock with no land to sell!
The epidemic market this time is different from 2008. In 2008, real estate led to the economic crisis. Housing prices fell because of that. This time, the epidemic has affected the daily life of the American people. These lifestyle changes have driven changes in the real estate market. Now that the vaccine is out, what is our outlook for the U.S. real estate market in 2021?
- Work remotely and work from home have become the new norm for most companies
- Video conferencing replaces the old office face-to-face meetings
- People are more accustomed to shopping online instead of shopping in the mall
- Food delivery service replaces the habit of dining out
- Everyone likes to have more their own private space
Here are our perspectives after we combine our daily observations and a close look at the U.S. real estate data.
Perspective 1: Urban to Suburban Migration
Many Americans are moving from large cities to suburban cities. Especially New York, Los Angeles, Philadelphia, Chicago. People became dislike of living in large cities, densely populated areas, and easily contagious. This pandemic has given white-collar workers a new working from home lifestyle. Living in a big city no longer have employment advantages. Everyone now values open space, natural scenery, and high-speed Internet infrastructure. With more and more people can work remotely, areas that are two to three hours away from big cities have now become popular residential markets.
Perspective 2: More Rooms, Bigger Houses
New living and working habits have also changed the demand for residential space. In the past, when we buy a house, they look at the number of bedrooms, how spacious is my living room. Now people spend more time working from home, not only do they need bedrooms, but they also need office rooms. Children need larger bedrooms where they can take online courses and play. Larger dining rooms and kitchens have become necessary to accommodate more family activities. They also became essential for three meals a day.
In the past, it was common for two, even three generations to live together. Now more and more families hope to have their own independent living space. For example, adult children used to live with their parents, but now they want to move out by themselves. Families used to live with parents and the kids, grandparents, now they need to have their own independent houses.
While everyone spends more time at home, larger lots and larger back yards have become new desires.
Perspective 3: Less Office Space
Many American companies now use work from home and video conferencing models. Most of our friends and neighbors’ companies have already decided on a work from home policy until the end of 2021 (not the end of 2020!). The demand for office buildings disappeared. Employees do not need to commute every day, and work efficiency has changed. Employers found that they no longer need to pay office rental, network, and phone costs. This immediately saves lots of money for employers and helps recuperate some of the losses caused by the pandemic. This trend will have a lasting impact. Even after the pandemic, this new working model will continue.
Perspective 4: Smaller Restaurants
As dining demand declines, restaurant space demand also becomes smaller and smaller. Food delivery will pick up more share of the restaurant business. Restaurants will reduce their dining space while enhancing kitchen efficiency. Food delivery services such as Grubhub will continue to see a surge in business.
Perspective 5: Fewer stores, more logistics warehouses
What about retail space? Everyone now minimizes shopping in stores. Staying at home stimulated online shopping. We are very optimistic about the e-commerce logistics land segment. More online shopping orders will drive the need for quicker and shorter delivery times. More and more data will become available and will drive the order forecast accuracy. For land – it means companies like Amazon will need to build more pre-warehouses. A pre-warehouse is a small city/urban warehouse that stores the “last-mile” merchandise. We will see that this pre-warehouse land demand in 2021.
Overall, we are very optimistic about residential land and e-commerce logistics lots. But at the same time, we are pessimistic about commercial offices, retail space, and dining space. We hope our perspectives can give you some inspiration! If you need to buy a residential plot, please contact our Elegment Land Team!
Check out our available land parcels! https://land.elegment.com/