In unprecedented times, people reflexively become gripped with fear and trepidation, but industry leaders can assess the bigger picture and not only take stock, but forecast what emergence will look like. The following guest column from Bob Goldberg, CEO of the National Association of Realtors® does just that – he takes stock of today’s realities and offers unique insights into changing the status quo.
Commercial real estate, an industry many feared would suffer broad, lasting distress as a result of the pandemic, fared better in 2021 than just about anyone expected.
The multifamily market, in fact, had a historic year, as the National Association of Realtors®’ Commercial Market Insights Report pointed out last month. Vacancy rates hit 35-year lows and median asking rent grew at a record pace amid a recovery in household formation.
Meanwhile, demand for U.S. industrial space continues to significantly outpace supply, and NAR economists expect the demand for commercial real estate to strengthen throughout 2022.
Given where we were less than two years ago, it’s natural for us to ask, how did this happen?
How, when offices were left vacant, urban cores were abandoned, and even more existing business activity turned online, has commercial real estate survived, or, in some cases, thrived?
The reality is that real estate – both commercial and residential – has been evolving alongside a changing market for decades.
Innovations which had been years in the making were perfectly positioned and perfectly timed when the pandemic began. New, cutting-edge technologies allowed families to relocate, transactions to close, and commerce to continue even as much of the nation ground to a halt in early 2020.
Indeed, without the broader market activity that has been catalyzed by our industry – with home sales hitting 15-year highs and demand for multifamily and industrial real estate booming – this period of relative economic prosperity would have been more distant, more elusive.
As is the case for most things in life, hard work and sacrifice are to thank. But we can also credit a principal that is perpetually in focus at NAR – innovation.
Renowned economist Theodore Levitt once said that creativity is thinking up new things, while innovation is doing new things.
It’s been American real estate’s collective, remarkable ability to continue doing new things that has made this revival possible, a phenomenon which has benefitted consumers everywhere along the way.
Through our tech growth program, REACH, and our association’s investment arm, Second Century Ventures (SCV), NAR has been on the cutting edge of innovation in real estate technology for more than a decade.
Some of the more than two dozen companies from the REACH portfolio which were instrumental in the industry overcoming lockdowns and social distancing measures include BoxBrownie.com and Immoviewer, which specialize in 3D 360 tours and floor plan renders; UbiPark, a contact-free smart parking solution; and Loop&Tie, a bespoke gifting platform that helps real estate professionals engage with clients and employees from afar.
Overall, SCV has allowed Realtors® to seed some 160 technology companies that engage in everything from digital title and escrow transfers to virtual staging tools and automated marketing campaigns. E-signature services provider DocuSign and remote notarization platform Notarize are a few of the most recognizable entities, but a host of others have imagined the revolutionary resources which will soon be commonplace in our industry.
Residential markets reaching 15-year highs in the midst of a pandemic without tools like these is simply unimaginable.
In the commercial sector, too, these innovations have proven invaluable. Some of the 30 new technology companies supported by REACH Commercial which have been leading the charge these past two years include Lulafit, Pear Chef, and Cove. Indeed, just months after the pandemic broke, Cove launched new software platforms to help tenants and building owners return to work safely once stay-at-home orders were lifted.
As Bisnow highlighted at the time, these innovative new resources were created to help companies track the occupancy of their spaces, set cleaning schedules and conduct health checks, while their employees could reserve desks, stagger arrival times, and form elevator queues.
Looking ahead, we must retain the aptitude for progress that propelled real estate through COVID in order for our industry to thrive through the seemingly endless string of market transformations.
One of the true bright spots in an otherwise tragic circumstance is that this pandemic has made people more aware of the places and spaces we occupy. How all of us live and work in these spaces has changed forever. Naturally, this new mindset has generated a renewed focus on sustainability.
Real estate’s motivation to engage is obvious.
The First Street Foundation, which developed the Flood Factor tool employed on realtor.com® and elsewhere to provide flood risk assessments for hundreds of millions of properties, engaged on a recent study which estimated structural damage from U.S. flooding will exceed $13 billion in 2022.
More severe flooding events and property damage are the most widely known consequence of climate change, but its impacts do not stop there.
CoreLogic’s 2020 Wildfire Risk Report reported more than 1.9 million homes – with an associated reconstruction cost of almost $650 billion – were at elevated risk of wildfire damage. The regions most at risk, perhaps unsurprisingly, are metro areas in California.
NAR offers grant resources to state and local Realtor® associations in effort to make communities more resilient, encouraging new and unique strategies that foster sustainability and combat the potentially damaging impacts of climate change. In Oregon, for example, the Rogue Valley Association of Realtors® – a region devastated by wildfires in recent years – used a Consumer Advocacy grant from NAR to coordinate a two-day training and certification program for home inspectors conducted by the National Fire Protection Association.
Henry Ford is claimed to have noted that if he had asked his first customers what they wanted, “they would have said faster horses,” rather than the automobile. Whether Ford said this or not is today the subject of some digital disagreement. But that’s irrelevant.
Truth is, we often don’t know what we need until we’re faced with a moment of distress or distraction or despair. A once-in-a century global pandemic, for example.
No one knows the future, and very few know what they will want at any, undetermined point in it. All we know for certain is that the future will be different than today.
And if we’re not changing the status quo, we might just find that we’ve become it.
Bob Goldberg is CEO of the National Association of Realtors®. Since assuming the role in August of 2017, Bob has overseen transformations that have positioned NAR as real estate’s leading figure in the fight for diversity and inclusion; the industry’s primary driver of technological innovation; and as an association lauded for a genuine, unwavering commitment to its members. As part of the responsibility NAR has to more than 1.5 million REALTORS® worldwide, Goldberg has overseen the formation of a number of initiatives which have influenced the market and proven immensely valuable to NAR’s general membership.