A Systemic Change in Fundamentals: The Brave New World of Post-Recovery Office Space.
After any disaster, can things ever return to normal? We all want to believe they can, and yet disasters, whether economic or physical, always seem to make their permanent mark. For example, Chicagorecovered from its devastating fire of 1871, but became a completely different city. The global economy returned to growth after the Great Depression of the 1930’s, but with different rules, different companies, different industries, and different countries in control. Europerecovered from the Second World War and from the Cold War, but political, economic, and cultural life in those countries is fundamentally different than it was in the first half of the 20th century. We may recover, but we can’t go back to the way things were.
The Great Recession of 2007 promises to have a profound effect. It is tempting to believe that commercial real estate will return to normal as the economy recovers, but will it? This was more than a cyclical downturn; it was a near financial collapse. What are the new rules now that the old world was changed by the capital markets bubble and its aftermath? Can commercial real estate avoid facing new realities more profound than cyclical changes in supply, demand and value?
To answer those questions, we spoke recently with members of the National Association of Real Estate Investment Managers (NAREIM) to get their perspective on the changes taking place today.The Case for Real Estate →