Real Estate

Winter is Here, But Spring is Coming

February 2021 – 11 min read
With additional fiscal relief and steady progress in vaccinations in the first half of 2021, the U.S. economy should be regaining momentum by the end of Q2, helping to stabilize real estate demand in the second half of the year. The Barings Real Estate team weighs in.


  • The recovery in the U.S. economy and labor market has been put on hold as authorities reintroduced restrictions on social and business activity to contain the latest COVID wave.
  • Massive fiscal relief and monetary stimulus continue to support the U.S. and global economies and financial markets for now, but both will likely need continued support.
  • Although the U.S. economy shed jobs in December, job losses were largely confined to services business, which have been most impacted by COVID restrictions.
  • With additional fiscal relief and steady progress in vaccinations in the first half of 2021, the economy should be regaining momentum by the end of Q2, helping to stabilize real estate demand in the second half of the year.

Property Markets

  • With the notable exception of the industrial sector, occupier market fundamentals continue to deteriorate across the major property types.
  • New supply and leasing concessions continue to weigh on apartment effective rents and occupancies.
  • Warehouse demand surged in Q4 2020 to its highest level in two decades, outpacing supply for the first quarter since 2018. 
  • Office fundamentals have weakened noticeably as leasing remains weak, sublease availability continues to increase and supply comes online.
  • Retail sales slipped in the final three months of the year as service businesses were forced to close or limit operations, creating further headwinds for retail property owners. 
  • The modest recovery in hotel demand also reversed course, further delaying the demand recovery until the virus is no longer a threat.

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Ryan LaRue


Philip Conner

Head of U.S. Real Estate Research & Strategy

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