The COVID-19 pandemic has accelerated a lot of existing trends, but one trend in commercial real estate is actually something new. According to a report from Motley Fool, commercial properties with drive-through lanes are commanding premium prices as more and more Americans find they would really prefer to order and eat in their cars. In fact, a property with a drive-through lane (or more than one) may command rents up to 20 percent higher than typical lots, meaning that they are selling for top dollar as well at about 7 percent more than comparable properties without drive-through lanes.
Although the commercial real estate sector suffered in 2020 and, in certain industries, in 2021 as well, the larger commercial market is making a huge comeback in 2022. According to CBRE, numbers from the conclusion of 2021 indicated that commercial real estate investment volumes hit $746 billion during that year, up 86 percent over 2020 despite serious hits in the retail and restaurant sectors. Not surprisingly, multifamily led the way with $136 billion invested in Q4 2021 alone and an annual total of $315 billion. Industrial real estate came in second with $64 billion in Q4 2021 alone.
CBRE executive vice president Todd Tydlaska called investors’ move back into commercial real estate a “defensive move,” noting that real estate has traditionally been a favored hedge against inflation. “Investors are trying to find yield, and real estate offers relatively attractive yield on a risk-adjusted basis,” he said.
Foreign investors are also moving back into U.S. markets, with overseas capital accounting for $56 billion in 2021 (7.5 percent of total investment volume for that year). Interestingly, the leading source of foreign capital was Canada, not China, and investors from Singapore are responsible for the second-largest amount of foreign capital deployed in the U.S. commercial market last year.
Favorite types of commercial properties include restaurants, pharmacies, and bank properties, likely because of the prevalence of drive-through lanes at these types of properties. Restaurants like Chipotle Mexican Grill, which did not open a drive-through until 2018, have opened dozens of new locations since the start of the pandemic – nearly all with drive-through lanes. Even longstanding members of the fast-food drive-through community are ramping up their window service. Burger King reported it will install triple drive-throughs in its locations in the near future and reserve one lane solely for customers who have ordered online.