COVID's effect on real estate was a hot topic early in the pandemic, but the residential market clearly took off. A combination of increased saving, low interest rates, high household formation, and desire for more space for working and distancing added up to strong demand, while lack of supply fueled the increase in prices that followed. Although there was a dip here in the second quarter of 2020, the rest of the year, and most of this year so far, have been good ones for the industry.
But what of commercial real estate? Uncertainly is always a huge factor in that sector, and nothing could have been more uncertain than the length and severity of the public health crisis. While office space has continued to languish in many places, research facilities and health care needs have boomed. Distribution was already a robust area, and the pandemic caused more and more home delivery, leading to greater demand for distribution footage.
In Connecticut's cities, the increase in population has led to the building of additional rental apartments, particularly in the luxury market, and they have continued to lease well. The latest census shows a shift from suburbs to cities over the State, with New Haven out in front.
Homeowners and tenants always lead to more demand for retail, and, despite lockdowns and closings, this year has been no exception. Only lack of staff has limited restaurant growth. The most surprising fact is the desire for more retail grocery stores. Even though people have been wanting, and waiting, to eat out, they apparently are cooking more as well. Fairfield County especially seems to be seeing a great deal of transactions in premium stores.
If the last two years have taught us anything, they've taught us that it's hard to predict the future. Yet, throughout it all, real estate has carved out a healthy growth rate and popularity. And that bodes well for Connecticut's next decade.
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