Sunny Days Ahead for Commercial Real Estate?
Research Center Says Strong Recovery to Lift State, Metro Commercial Sectors.

Forecasts say the U.S. economy will experience huge growth in 2021. Economists predict a 6.5% increase—one of the largest since the 1980s.

That growth will mean good things for Texas commercial real estate, says Luis Torres, research economist with the Texas Real Estate Research Center and co-author of the center’s Texas Quarterly Commercial Report.

“The third round of federal stimulus money and the increasing vaccination rates are giving us an optimistic outlook going forward,” Torres says. “We can actually put an end to the health crisis we are currently living through and possibly an end to the recession caused by that health crisis.”

Researchers will be watching unemployment rates, employment rates by sector, vacancy rates, new construction, and net absorption to determine where commercial real estate is headed.

Where metropolitan areas and their commercial sectors are now depends, in part, on the major industries fueling their economies, according to Torres.

“In Austin and Dallas-Fort Worth, the commercial market was more optimistic because the economy—the tech and financial jobs and those sectors—have done well during the pandemic and are expected to do well going forward,” he says. Houston has faced more challenges due to the contraction in the oil industry and overbuilding its office and industrial inventory.

The office market statewide is still uncertain, Torres says. Researchers will know more in the second half of 2021 when most employees return to their offices.

“What everyone’s talking about currently is a hybrid office model: going into the office for a couple of days a week or for fewer hours a week than before,” he says. Torres believes offices are not going away, but employers may consider hybrid models to get the best of both worlds: proven at-home productivity and the office’s networking, team building, and infrastructure.

How such a model will affect vacancy rates and rents remains to be seen. The report says companies could create more satellite offices in suburbs and lower-density cities.

Retail will likely continue to consolidate and contract this year, but new retail that is convenient, attractive, pleasing, engaging, or entertaining could flourish, according to the report. Industrial will continue to benefit from e-commerce growth and the need for distribution and warehouse centers in 2021.

To read the report, visit