Under the very unique conditions created by COVID-19 and associated lockdowns, some property types previously viewed as “niche” have proven they can be both recession- and pandemic-resilient. Some of these properties were already in high demand previously—investors have generally favored biolab space and single-family rentals (SFRs) in recent years.
But in a world where most office workers have either been urged to or opted to work from home, buildings dedicated to biolab facilities continued to be far more occupied, partly as a result of the necessary work taking place there and partly because they already had plenty of safety protocols in place to begin with.
Likewise, with many middle-class families finding life locked inside small urban apartments trying, there has been an increased leasing velocity at SFRs, which offer the advantages of a house with a backyard without the accompanying mortgage. A similar dynamic played out for manufactured housing.
But one unexpected breakout star of the pandemic has been cold storage as a substantial portion of grocery sales moved online. Demand for cold-storage facilities that was expected to take several years to materialize happened virtually overnight and is only expected to grow further in the years ahead.
Also having a particularly strong year were data centers which experienced a massive surge as more parts of our daily lives moved online. For many, it was a year of working, studying and socializing remotely as well as streaming content and ordering everything online. Use of videoconferencing platforms, most prominently Zoom, exploded. That led big-name investors, including Blackstone and Goldman Sachs, to up their bets on data centers, though, given the sector’s demands for security, power and HVAC systems, it remains a challenge to find enough facilities and operators in the market to invest in, which will continue to fuel demand in 2021.