When DLA Piper fielded the 2019 DLA Piper Annual State of the Market Survey, most respondents were moderately bullish and optimistic that growth would continue.

A year later, after the arrival of COVID-19, the picture has changed. The bulk of the respondents, 59%, expect a bearish market for at least the next 12 months to come. However, a majority of respondents, which comprise high-ranking senior CRE executives, believe US GDP will return to pre-pandemic levels in 2022.

“Between March and June, I bet we would’ve gotten a different and more pessimistic answer, but I think we benefited in terms of getting good information from the fact that we waited a few months,” John Sullivan, US chair and global co-chair of DLA Piper’s Real Estate practice told GlobeSt.com. “People had a bit of a chance to see how this seems like it’s going to play out and maybe start to put this incredibly unusual situation into some perspective.” 

The majority of respondents, 76%, believed that COVID-19 vaccine development would be the most significant contributing factor to a global CRE recovery. That was followed by the recovery of the global economy at 49 percent, the 2020 US elections at 44 percent and US GDP recovery at 40 percent. 

More than half, 58%, of respondents said an abundance of available investment capital was the top reason for an optimistic economic outlook, increasing 15 percentage points from the 2019 Survey. 

Respondents thought that two sectors—warehouse and logistics and life science and biotech—offered the best attractive risk-adjusted opportunities in the US for real estate. For the second year in a row, respondents chose logistics and warehousing as the most attractive investment opportunity, increasing from 58 percent in 2019 to 68 percent in 2020. Life science and biotech real estate, which rose 15 percentage points to 58 percent, was identified by respondents as representing the second most attractive investment opportunity. 

On the other hand, student housing at 44 percent, senior housing at 13 percent and urban/transit-oriented mixed-use development at 10 percent exhibited the steepest declines in interest since the 2019 Survey.

As COVID continued to impact dense metros with high-rise buildings, large cities Los Angeles, San Francisco, Chicago and Philadelphia, saw a drop in attractiveness year-over-year. Instead, respondents ranked Austin, Nashville, Denver, Charlotte and Raleigh-Durham as the most attractive cities for investment.

Sullivan doesn’t see a long-term move away from the major metros, though. “There’s so much going for those places [big cities] that I don’t think they’re going to be permanently out of favor,” Sullivan told GlobeSt.com. “Maybe on the margin there will be some impact, but I don’t think it’s a long-term fundamental shift.”