Five Years Later

CRE in a Post-Pandemic World

The COVID-19 pandemic, which began in March 2020, brought profound and unprecedented changes to how people lived, worked and played. These shifts reshaped the way businesses, customers and employees interacted with physical spaces.

While some economic disruptions were negative, many opportunities emerged that benefited the economy and the commercial real estate sector. Five years later, certain behavioral changes remain, while other aspects of daily life have gradually returned to pre-pandemic norms.

At Cushman & Wakefield, we are constantly focused on how commercial real estate and the built environment drive communities, businesses and people forward. In this article, we explore five ways the pandemic altered our world, whether these changes appear permanent, and what they mean for the future of our cities and the built environment.

Cities Are “Cool” Again 

Young people are leading a movement back into cities, and companies are following suit. 

• Cities were initially more severely impacted by pandemic: In the immediate wake of the pandemic, CBD multifamily occupancy cratered by over 375 basis points (bps). People, especially young renters-by-choice, moved out of cities. 
• The exodus was temporary: Multifamily occupancy levels returned to and exceeded pre-pandemic norms by the end of 2021. 
• Young residents are driving the return: For example, the 15–29-year-old population in Manhattan grew by 9% in 2022 and 2023, while the over 30-year-old population was flat. Nationally, one-fifth of young home buyers in 2024 bought in the central city, up from 14% in 2020. 
• Businesses have also returned: Office demand has followed a similar trajectory. The share of Class A office leasing occurring in the CBD has returned to its historical level (~41%). 
  
  ^{Source: U.S. Census Bureau, CoStar, National Association of Realtors, Cushman & Wakefield Research}

Commutes and Work Patterns Are Changing 

Employee behavior has shifted, with a growing reluctance to endure long commutes as often as they did prior to 2020. 

• Not surprisingly, people living close to the office show up more frequently: In fact, the foot traffic levels for employees living within a mile of their office is 90%+ of pre-pandemic norms. Conversely, employees living more than 3 miles away are coming into the office about 70% as often as they did before 2020. 
• Employees want flexibility: Most office workers want the option to choose when and where they work. Not having that autonomy has significant negative impacts on employee experience. 
• But most employees do want to be in the office regularly: In 2024, 71% of employees indicated they wanted to be in the office at least once a week, up from just 49% in 2021. Young workers are even more likely to want to attend the office regularly (76%)—underlining the importance of relationships and socialization for them. 
  
  ^{Source: Placer.ai, C&W Experience Per Square Foot™ survey, Cushman & Wakefield Research}

Lifestyle and Spending Habits Normalize

The pandemic caused shifts in consumption patterns, but many of those have now reverted to normal trend lines. 

• Pandemic accelerated some trends: E-commerce sales grew 15% annually from 2010 to 2019. Lockdowns and reduced spending on services caused online shopping to surge by 44% in 2020. As the economy reopened, demand for experiences grew, and restaurant sales boomed. 
• Other activity halted: International tourism fell to one-tenth its 2019 levels in the wake of the pandemic but has been recovering. 
• The long-term trajectory has resumed: After the shock to the system, many consumer behaviors, e-commerce sales, restaurant sales and international tourism have returned to normal, long-term ranges. 
  
  ^{Source: U.S. Census Bureau, National Travel & Tourism Office, Cushman & Wakefield Research}

Construction Pipeline Is Cooling Off

While construction activity since 2020 has varied by property type, pipelines are currently receding across the board.

• Industrial and multifamily construction receding from recent peaks: Changes in consumer behavior drove pops in demand and subsequent building boomlets for industrial and multifamily. Current construction pipelines are now back below Q1 2020 by 17% and 8%, respectively. 
• Retail construction has been low for seven years: While other CRE property types have experienced recent historical highs in their pipelines, retail construction activity has been muted since before the pandemic. This is why even as store closings picked up in 2024, retail vacancy levels remained tight. 
• Office came into pandemic with record-level pipeline: The U.S. office market had 135 msf of space under construction in Q1 2020. That has steadily receded to under 30 msf. Looking forward, the paltry pipeline will cause challenges for occupiers looking for high-quality space in the second half of the decade. 
  
  ^{Source: CoStar, Cushman & Wakefield Research}

Reimagining Cities with the Right Mix of Spaces

The ever-expanding experience economy requires the built environment to evolve with the right mix of real estate uses. 

• Our cities are magnets for visitors: Two-thirds of foot traffic in walkable parts of the urban core is from visitors. And, these visitors are largely drawn to anchor institutions, such as cultural institutions and sports and entertainment venues.
  
• But many of them have too little “Play” space: What has become clear post-pandemic is that our urban cores are often too work-centric and do not have the right mix of real estate uses. In the optimal mix, one-fourth of square footage would be dedicated to retail, hotel, sports and entertainment, museums, and other "Play" real estate. However, "Play" only accounts for 12%-15% of urban real estate right now.
  
• The right mix leads to the best outcomes: Neighborhoods with an optimal mix of "Play" have performed better—GDP has grown more, valuations have been more resilient, and visitor foot traffic has recovered the most.
  
  ^{Source: Places Platform, LLC, Cushman & Wakefield Research}