2021 IRR Viewpoint Report

Bright Spots in U.S. Commercial Real Estate Market Remain Despite Economic Uncertainty, According to Integra’s 2021 Viewpoint Report

Annual Report Unveils Commercial Real Estate Trends Across Five Main Property Sectors, Office, Multifamily, Retail, Industrial, and Hospitality; Includes Specialty Report on Senior Housing

DENVER, CO — (January 05, 2021) — Heading into the new year, market watchers are optimistic about a mid-year economic turnaround that will have a positive impact across the commercial real estate market, according to Integra Realty Resources’ (IRR) signature Viewpoint 2021 publication released today.

The annual report provides a detailed overview of local and national commercial real estate market across five key property types: office, multifamily, retail, industrial and hospitality. Viewpoint 2021 also examines trends from the economy, housing, capital markets, interest rates and employment, exploring how these trends will affect commercial real estate markets in the year ahead. This year’s specialty property sector analysis covers Healthcare and Senior Housing.

“Here we are, one year later,” says Anthony M. Graziano, MAI, CRE, CEO of Integra Realty Resources. “The greatest peril the world has seen in more than 80 years has shattered U.S. small businesses, along with our hospitality and retail sectors. In less than nine months, the stock market has confounded the bears, while most local housing markets across the nation posted their best close on volume and price gains in years. The vulture real estate funds remain on the sidelines, waiting for deals that have yet to materialize. Despite the economic uncertainty and market volatility, bright spots remain across the real estate landscape, and we remain cautiously optimistic as we begin the new year.”

As in previous years, this highly anticipated report was produced in partnership with well-known veteran commercial real estate economist, Hugh F. Kelly, PhD, CRE, who adds, “Following 2020, it is fairly easy to predict that 2021 is bound to be better. The new vaccines mean real hope for improved public health conditions supporting economic revival. However, the winter viral surge will leave economic scars. Washington gridlock has raised risks of a ‘W’ recession, constraining early 2021 growth. So, while readers will see there are many reasons for optimism, there are also many reasons for caution as hopeful eyes look towards a mid-year economic recovery.”

IRR Viewpoint 2021 Highlights


  • Those hoping a post-pandemic economy will swiftly return to conditions prevailing in late 2019 are going to be disappointed.
  • Real GDP is still $670 billion off the pre-COVID peak. A return to the prior real GDP peak is projected in the first quarter of 2022 at the earliest, or second quarter 2023 at the latest.
  • The jobs recovery to prior peak is September 2024, at best, and October 2026, at worst.
  • Cap rates for real estate and commercial property mortgage rates have remained stable. With commercial property transactions down 50 percent, year over year, risk-adjusted returns are high and will remain that way into 2021.
  • Interest rates are anticipated to remain low through 2023, or even 2024.
  • Monetary policy will keep the sluice gates of capital wide open, bringing an optimistic air to private sector capital markets both on the equity and the debt side.
  • Coronavirus disruption is creating innovation opportunities across a swath of industries: technology, communications, pharmaceuticals, health services, and even retailing and financial services.


  • The roughly five billion-square-foot U.S. office market has been directly in the crosshairs of the coronavirus pandemic and no part of the country—urban or rural—has proved immune.
  • According to Integra’s market survey, quantifiable comparisons across regions and property classes indicate the market is sorting itself out in a ‘flight to quality’ rather than ‘a flight to cost-advantage.’
  • The pandemic disruption has shrunk transactions so steeply that office investors should be cautious about drawing firm conclusions at this point.
  • From the point of view of property operations, the East and West regions are sustaining the highest market rents and strongest occupancy levels.
  • The pattern of the future may require a transformative change in the physical, operational, and financial aspects of the office markets, rather than a comforting return to normalcy.


  • Apartments have held their top ranking in investment volume, with $92.4 billion in year-to-date deals as of October 2020. However, this figure represents a 40 percent decline year-over-year.
  • Uniquely among the major property types, apartments have sustained a reduction in cap rates over the course of 2020, signaling optimism about future returns for this sector.
  • The approximately 50/50 split in markets deemed in expansion or recovery (33 metros, or 50.8 percent) versus those in recession or hypersupply (32 markets, or 49.2 percent) betrays the awareness of IRR’s professionals of the tension faced by apartment investors going into 2020.
  • Most of the nation’s largest and most visible multifamily markets are those mired in recession: New York, Boston, Chicago, Miami, Houston, Seattle, and Portland, among them.
  • There appears to be an intriguing disconnect between the elements that renters themselves and investors are prioritizing in the stress test that is this pandemic. For while market cycle indicators seem to reflect advantage accruing to the least expensive rental markets, the cap rate data show preference for urban properties over suburban assets, and Class A over Class B apartments – and this is true across regions, as well as being consistent in the discount rate and reversion rate pricing metrics.


  • The rise of e-commerce has been accelerated by the pandemic, and it is questionable whether consumer habits will return to in-store shopping once the public health emergency is past.
  • The cap rate, discount rate, and reversion rate for the retail sector reflect the extremely thin transaction market of 2020.
  • It is no surprise that more than half of the retail markets evaluated in IRR’s annual Market Cycle survey are rated as being ‘in recession.’
  • Declining market rents are the norm today.
  • At some point around mid-2021, the economy will be decisively putting the public health crisis behind it, and a more familiar pattern of consumer behavior will restore to physical retail properties some of the market share that has been captured, by default, in e-commerce.


  • As U.S. employment dropped during the pandemic, the warehouse and storage sector saw a net increase of 46,000 jobs, or 3.8 percent. As in so many ways, Amazon has set the pace both in jobs and in industrial property use.
  • Soaring e-commerce sales contributed to the 36 million square feet of net absorption registered by REIS in the second and third quarters of 2020.
  • One of the key lessons of the coronavirus crisis has been the need to re-think supply chain management with businesses supplementing traditional, ‘just-in-time’ strategies, meant to minimize costs, with ‘just-in-case’ measures.
  • Fully 80 percent of the industrial markets are deemed in recovery or in expansion in this year’s IRR survey of cyclical conditions.
  • A combination of solid performance in 2020 and reasonably anticipated economic improvement later in 2021 should bring buyers off the sidelines relatively soon.


  • The lodging market has been devastated by the pandemic. IRR does not anticipate a return to pre-pandemic metrics until early 2024 due to decreased demand.
  • The top markets for occupancy include Phoenix, Atlanta, Norfolk/VA Beach, Los Angeles/Long Beach, San Diego, and Tampa/St. Petersburg. The hardest hit states were Hawaii (-65.2 percent), followed by Illinois, Massachusetts, New York (-49.1 percent), California, and Florida.
  • Operators are placing emphasis on sanitation/cleaning protocols, increased customer service, and digital check-ins. Due to limited capacities, daily operations are changing, and operators are looking for alternative sources of guests, as they re-purpose under-utilized spaces.
  • Sellers are finding new, non-traditional buyer pools, as cities and counties are purchasing underperforming hotels for transitional and low-income housing requirements.
  • As the U.S. exits the current pandemic, major mergers and acquisitions activity is anticipated among the ‘Big 6’ hotel companies.

Healthcare & Senior Housing Specialty Property Report:

  • Cash flows at many properties have been disrupted by reduced occupancy, higher operating expenses, possible lowering of rent caused by changes in short-term demand, and additional risk premiums applied to the capitalization processes. Lower interest rates are an offsetting force.
  • While the pandemic caused a net reduction in occupied units, slowed move-ins and accelerated

move-outs, senior housing continued to grow in 2020.

  • Healthcare is performing better than retail and hospitality, but valuations have declined more than residential and industrial.
  • Nursing Home occupancy has been declining for years.
  • Industry consolidation via mergers and acquisitions remains an ongoing trend in the hospital industry.

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CBrenner, Inc. has focused on commercial real estate in central Florida for over 30 years having brokered sales and leases of undeveloped land, offices, warehouse, and flex space throughout Florida. These areas include Orlando, Downtown Orlando, Winter Park, Altamonte Springs, Casselberry, Lake Mary, Longwood and everywhere else in Orange, Seminole and Volusia counties.

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