Economic Forecast: Real estate to feel pandemic’s effects
PHOTO/GRANT WELKER
Xceedance has moved its global headquarters to the former Unum building in downtown Worcester
Figuring out exactly when people may be able to comfortably and safely return to in-person shopping on the same scale they did before the coronavirus pandemic will be difficult. But 2021 should, at some point, give customers the ability to shop in person safely again. As for employees who’ve been able to work from home, the question may be a matter of whether their employer will have them back in – or whether they even have an office to return to.
A turning point for retail
By the time it’s safe to shop in person as people used to, there may not be nearly as many places to shop in person anymore anyway. The Greendale Mall will close as soon as T.J. Maxx and HomeGoods move out, and it’s slated – ironically – to be replaced by an Amazon fulfillment center. The Natick Mall is losing two anchors, Neiman Marcus and Lord & Taylor. The Solomon Pond Mall in Marlborough may lose its Regal cinemas as the movie theater giant fights off bankruptcy. If Black Friday was an indicator, shoppers’ habits may have changed dramatically, with analysts estimating in-person sales dropping by 20%, according to The New York Times.
Shifting role of offices
For years, working remotely was for sick days or snow days. For those fortunate enough to have the option, the pandemic brought the possibility of working from home indefinitely. In the most notable instance, the insurer Unum said in July it will close its downtown Worcester offices and have 400 employees work permanently from home. Other indicators have similarly not been cause for optimism among landlords or those who benefit from having offices full. As of early fall, downtown Worcester’s office market was roughly 18% vacant, according to the Worcester Business Development Corp. In Framingham and Natick, which could benefit from big tenants decamping from cramped spaces in Boston, more than 100,000 square feet of office space was available for sublease in the fall as major tenants offered up space, according to R.W. Holmes Realty Co. of Wayland.
Endlessly climbing home prices
If a pandemic can’t bring down home prices, what can? The problem, for those looking to buy, is the pandemic has only caused even fewer homes to go on the market, which caused so little supply demand had nowhere to go but up. Through October, year-to-date median sale prices in Worcester County were up 11.2%, coming in at $322,500 compared to $290,000 the year prior, according to The Warren Group. In the city of Worcester, prices were up 15.9%. While the pandemic’s eventual end may put more homes back on the market, the only way to stabilize home prices enough for more people to buy is for more new housing to be built in the area.
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