Seyfarth Real Estate Market Sentiment Survey Unveils Top Concerns for 2022

(February 24, 2022) -- As the global economy continues to recover from the pandemic’s impact over the last two years, 2022 marks a turning point for the commercial real estate (CRE) industry. Executives are facing historic inflation, shifting workplace dynamics, and an unstable supply chain. However, optimism remains high for the next year as the industry carries over healthy momentum and a sharpened focus on new investment strategies. Among many key topics covered in Seyfarth’s 7th annual Real Estate Market Sentiment Survey, CRE executives weigh in on their top concerns, the migration to remote work, and vaccine mandates.

Seyfarth’s 2022 Survey examines the industry’s current market sentiment as it navigates economic challenges and a new workplace standard:

More Momentum: The CRE industry is feeling optimistic about 2022 even with multiple rate hikes likely commencing in March. Almost identical to last year’s sentiment, 84 percent of real estate executives see 2022 as a year of opportunity. Opportunistic feelings may be linked to the desire to accelerate deals before rate hikes hit the market. While the survey consensus follows the Fed guidance and respondents predict at least three hikes this year, industry executives are more uncertain about where the interest rate ceiling is and when the market starts to suffer.

Cost Concerns: The top three concerns for real estate executives this year correspond to the many challenges impeding economic growth for every industry in 2022. While survey respondents were focused on pandemic-specific problems in 2021, CRE professionals are now flagging economic hurdles as areas of high trepidation: inflation, labor shortages, and supply chain challenges. Delays in the Emergency Rental Assistance Program have been a hot topic in industry circles but the holdup ranks as the lowest concern in this year’s survey.

Bridge Building: Last year, 46 percent of executives thought the Biden Administration would have a positive impact on the real estate industry. In November 2021, the Administration’s Infrastructure Investment and Jobs Act passed with bipartisan support. 25 percent of survey respondents say they are looking to take advantage of the new legislation in the next five years. Since infrastructure projects tend to move slowly, investment plans from a quarter of development decision-makers in the first year is significant.

Culture Crisis: In what may be the biggest warning sign from the 2022 survey, over three-quarters of CRE executives say the shift to work-from-home models has adversely impacted their company culture. Respondents are clear that their bottom line has remained healthy, but describe a new workplace that struggles to maintain employee loyalty and has seen corporate identity dip. Next year’s sentiment will be an important indicator for the sector as many of these hybrid arrangements become industry standard.

Shot Split: The CRE industry is split on whether to mandate vaccines as a condition of employment with 52 percent of respondents indicating that their company does not require the shot. Concern around the “Great Resignation” may account in part for the resistance to vaccine mandates. In addition, declining regional infection rates and the defeat of the federal “Vaccine or Test” rule at the Supreme Court may have played a hand.

Turn Away Tokens: Despite the increased interest of tokenization across the country, the CRE industry does not yet see non-fungible tokens as a viable form of capital in their transactions. Almost all survey respondents say they will pass on the new strategy this year. While most admitted they are confused by the concept, 19 percent of real estate executives are skeptical of the lack of regulation in the novel marketplace. 8 percent are satisfied with the current menu of capital source options.

Seyfarth’s Real Estate department, recognized as one of the largest real estate practices in the US, surveyed commercial real estate executives in January. View a full copy of the 2022 Seyfarth Real Estate Market Sentiment Survey here.

About Seyfarth
With more than 900 lawyers across 17 offices, Seyfarth Shaw LLP provides advisory, litigation, and transactional legal services to clients worldwide.

Contact:

Martin Grego, Director of Public Relations, (312) 460-6659, mgrego@seyfarth.com