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2021 Commercial Real Estate Outlook

ERES Leadership provides boots-on-the-ground insight on what commercial real estate owners and investors can expect in the coming year


In the world of commercial real estate 2020 was a year many of us will next forget. As the COVID pandemic began to affect markets large and small, investments across every sector were inundated with new and daunting challenges.  From multifamily where rents went unpaid to office space that sat empty due to stay-at-home orders to lenders who all simultaneously pressed the pause button. Additionally, property owners saw budgets increase due to the new normal – personal protective equipment (PPE) and increased sanitization standards. The entire world and the way we lived in it changed, and real estate owners and investors struggled to keep up.

commercial real estateWhile the industry continues to grapple with these many challenges, change inevitably brings opportunity.  New markets, new sectors and efficiency will come from the 2020 upheaval.  Those who saw success in navigating the troubled waters had one thing in common – the ability to quickly pivot and take advantage of the change.

So as we eye the year ahead, full of possibilities and a keener, more astute eye on pitfalls and risks, let’s take a look at what you can expect. We’ve consulted ERES leadership to provide their experienced perspective on 2021 brokerage, property and facilities management, development, investment and energy market trends which can be found below.

If you want to discuss your new year real estate challenges and needs, contact us at

2021 Commercial Real Estate Outlook


  • As we experienced in 2020, expect to see the vast majority of sale transactions happen between motivated sellers and opportunistic
  • Sale prices will be dependent upon their specific market, but will go as low as 30-50% of replacement costs. (particularly in hard hit energy markets)
  • Leasing volume will be slow, but expect to see shorter lease terms on most transactions and more aggressive rates
  • While leasing rates did condense in 2020, it wasn’t as much as expected which is a good sign for the coming year.
  • As vaccines become more available and widespread and folks get back to work in person, a market rebound should quickly follow.
  • Buy/sell activity will increase as companies begin to establish their 2021 budgets in a more concrete way.
  • All signs point to a good portion of remote employees to stay remote permanently. The ripple effect of tenant square footage requirements is something for landlords to stay in front of.

Property and Facilities Management

  • COVID forever changed the landscape for property and facilities owners with the addition of increased safety and sanitization protocols.
  • The level of vacancies and rent delinquencies seen in 2020 should taper off in the coming year. This will be aided by the continued administration of the COVID vaccine and renters returning to work.
  • A challenge that will continue into 2021 is filling rental vacancies without the ability to do in-person showings. As a result new and innovative leasing tactics have become of the utmost importance. This includes platforms that support easily accessible virtual showings and interactive 360-degree virtual tours, supported across all devices (desktop and mobile).
  • Last year saw a 30% YOY budget increase due to new PPE and cleaning/sanitization requirements.  While this was a substantial increase, it was not as large as expected. We believe this cost will decrease slightly in 2021 due to expanded accessibility and competition for materials.


  • Construction costs will be down across most markets, except for those that saw continued travel even through the pandemic.  Those markets will remain busy and will soon begin to see shortages of available workforce to support significantly sized projects.
  • Expect a continued increase in activity in secondary and tertiary markets, particularly in the Western Slope of Colorado.
  • Material pricing will continue to fluctuate well into 2Q 2021.
  • Infrastructure and public/municipal spending and development will increase through 2021 and beyond.
  • Offices that were previously “densified” will work to spread out people that are back in the office.
  • Some companies have seen significant increases in efficiency with work-at-home programs and will strive to reduce overall footprint and operating costs by continuing those programs into the new year.
  • Large Big Box industrial development will continue to increase.

Capital Investment

  • Significant portion of office will move to residential or other use-cases.
  • E-commerce continued growth and expansion, further domination of Amazon which is already taking over and converting old malls.
  • Square footage home growth will continue and potentially accelerate in 2021 (watch large home builder stocks) in secondary and tertiary markets.
  • Multifamily will remain strong as well for good secondary markets and suburban areas (“first ring”).
  • Cold storage industrial growth will accelerate in 2021 (new developments).
  • Large commercial real estate debt restructuring in 2021 (retail, restaurant, office, hotel, large metropolitan condos), could be catalyst for another market pull back, but TBD on the bubble there….still a lot of liquidity on the side lines.
  • Stock market correction in 2021, crazy and record breaking valuations relative to the overall economy. See Warren Buffett’s favorite market indicator nears record high, signaling stocks are overvalued and a crash may be coming.
  • HUGE pent-up demand for leisure and business travel, conferences, etc. should the vaccine become completely effective.

Energy Markets

Domestic | Bakken, Permian & Niobrara

  • Although this is the deepest bust that oil and gas has ever seen (prices went negative for the first time in history), the recovery has been much faster than other downturns.
  • In 2020 drilling came to a screeching halt which created a low supply. Post COVID demand should come back at a faster pace than projected creating an imbalance in the market causing oil prices to increase.
  • Development will be stagnant across the basins due to oversupply, particularly in North Dakota’s Bakken which was hit the hardest by COVID and low oil prices. Though we do expect to see some growth in the New Mexico portion of the Permian where construction activity has remained throughout the pandemic.
  • Recovery will remain slow throughout 2021, keeping property vacancies high and values low.
  • Rental rates will remain low when compared to historic averages. Keep in mind that low rates in energy markets are still higher than those in most primary markets due to the difficulty and expenses to build in rural locations. 
  • We are at the bottom of the pandemic lifecycle which creates a window of opportunity for investors.

International | Guyana & Vaca Muerta


  • Guyana is the one energy market bucking negative trends and is projected to do very well in 2021.
  • This is due in part to offshore and lift costs being some of the cheapest in the world creating incredible opportunities.
  • Real estate investors will see immense growth across most product types.
  • Halliburton has already announced that 90% of its 2021 budget is going to Guyana.

Vaca Muerta

  • Vaca Muerta will remain important to Argentina since it generates jobs and supplies the national energy market. Oil and gas companies expect the government to apply policies with incentives that will allow them to invest (and see those investments grow) as the region develops.
  • Oil companies expect to recover production levels in Q1 2021.
  • Companies are betting on continuing new wells and have announced plans to resume operations and include more equipment starting in January 2021.
  • The government launched the Gas Argentina 4 Plan. They expect an investment of $6.5 billion in the next few years. The main gas companies in the country are part of the plan.
  • The government of Neuquén has announced four public works projects for the market. Rolled out in 2021, these include an industrial park in Añelo and the Patagonian train which will be announced soon.
  • As part of an incentive package to encourage oil companies to operate in the region, a possible plan to export oil from Argentina will be considered this year.
  • During the pandemic working from home showed no loss in productivity and as a result office space availability has increased.  Although the current market is full of available properties, prices are starting to recover their average value. Working from home has also created the opportunity for co-working space needs when hosting large groups/meetings.
  • Argentina’s e-commerce sector grew more than 80% in the last 6 months which is projected to produce an increasing need for additional infrastructure (logistic centers, distribution centers, offices, etc.).

Smart Investment Decisions Are a Team Effort

We hope that this information can help provide some direction as you plan your property or portfolio needs for the coming year. Pandemic or not, maximizing commercial real estate investments can be difficult and time consuming, particularly in secondary, remote and/or rural areas. Successfully navigating market conditions and other nuances requires diligence, relationships, and vast experience.

No matter your commercial real estate challenge, ERES provides customized solutions to help achieve, and surpass, your goals. Contact us today to learn more at