Post-COVID Trends in Commercial Real Estate Investment Interest


Key Takeaways

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According to Google search volume data, there has been an unprecedented increase in searches related to the keywords “commercial property” and “commercial property for sale” over the past three years, even when adjusted for COVID-19 related disruptions.  

The scale of change in these data sets highlights a surprising contradiction.  At the dawn of the COVID-19 pandemic, many businesses – particularly those in service based industries like hotels and restaurants – closed quickly and permanently.  As such, the prevailing thought was that the commercial properties that house these types of tenants would also suffer.  The data tells a very different story.   It says that, despite COVID-19 related headwinds, investors are looking to come back into the commercial real estate space in a big way.

In this article, we will highlight the data, both on a national level and in five states, that supports this narrative.  First, a bit of background.

COVID-19’s Effect on Commercial Real Estate Investments

In many ways the commercial real estate investment industry’s reaction to COVID-19 is similar to the broader reaction of the United States in general.  It started with an initial wave of panic and apocalyptic sounding prognostications, then it learned how to thrive in a “new normal” before going on to surpass its pre-pandemic highs. 

On March 11th, 2020, the World Health Organization declared COVID-19 to be a pandemic, its first such designation since H1N1 influenza in 2009.  Further, they informed the general public that COVID-19 was caused by an airborne pathogen that was passed easily in large crowds and indoor spaces like restaurants, hotels, offices, and classrooms.  The general health guidance was to avoid these spaces and the behavior change was swift.  It wasn’t long before analysts started to calculate the potential commercial real estate impacts.  What would happen to malls, hotels, and office buildings if nobody left their house?  Notably, a Mckinsey report from April 2020 noted that “…Customers forced to shop online because of closed malls and shopping centers may permanently adjust their buying habits for certain categories…”

But, a funny thing happened.  A prolonged period of social distance served as a reminder of the importance of human connection, the comfort of the daily routine, and the joy of traveling to see family and friends.  A torrent of pent up demand was unleashed towards the end of 2020 as a vaccination campaign gained steam and property capacity restrictions were eased.  

One major commercial real estate owner demonstrates this point best.  In September 2021, Simon Property Group, a major owner of premier shopping, dining, and entertainment properties issued an earnings report for an incredibly successful quarter.  Among other positive developments, they noted that “… demand for our space from a broad spectrum of tenants is growing. Occupancy gains continued, retailer sales accelerated, including our owned brands, and cash flow increased.”  Further, they raised their dividend and earnings guidance, a development that would have been unthinkable at the beginning of the pandemic. 

The data from Google search trends support this narrative arc.

Google Search Data Tells The Story Of the Pandemic To Date

The graph below shows the national monthly search volume for the term “commercial properties for sale” and it can be seen that the changes closely mirror the arc of the pandemic to date:

Pre-pandemic, 2019 – 2020, total monthly search volume for the term “commercial properties for sale” averaged ~46,000 searches per month.  However, in mid-March of 2020, search interest fell suddenly and sharply to ~30,000 per month, which coincides with the timing of the WHO’s pandemic declaration and the issuance of stay at home orders in many states.  

Post Pandemic, Search Volume Rose Gradually Then Exploded

From the initial decline in March 2020, search traffic for “commercial properties for sale” recovered slowly and gradually, from ~30,000 per month to ~50,000 per month in late 2020.

On December 11th, 2020 the US government issued an emergency use authorization for Pfizer’s COVID-19 vaccine and approval for Moderna’s followed shortly thereafter on December 18th.  Approval of these vaccines was the first step towards a return to normal.  From this point, search interest exploded, reaching a high of ~76,000 searches per month in early 2021, a change of 65% from pre-pandemic averages.  If the change is measured from the lows post pandemic declaration, the change is 153%.

National vs. State Trends 

While the national data certainly tells a compelling story, looking at state level data reveals a number of areas where search traffic grew even faster than national averages.  They include: Ohio, Arizona, Texas, Kansas, and Washington D.C. Details on each are below.


From a demographic standpoint, one of the major themes of the pandemic is that there was (and is) an ongoing shift of residents from dense, urban areas which are expensive and prone to spreading the virus more easily, to less expensive, suburban areas which offer relative safety and a better quality of life.  So, it makes sense that Ohio is one of the five states to see a major uptick in traffic related to “commercial properties for sale.”  Perhaps it was new residents looking to start their own businesses or investors following the movement of new residents into the state.  The graph below tells the story of the increases:

Pre-pandemic, from 2019 – 2020, search traffic for “commercial properties for sale” was relatively consistent at ~1,600 searches per month.  Shortly, after the pandemic declaration, there was a sudden, sharp decline in search traffic for this term, followed by slow, steady rebound.

At around the time of vaccine approval, the recovery picked up steam, reaching a peak of ~3,400 per month, an increase of 112%.  Eventually, the traffic settled into a new normal with an average of 2,922 searches per month, an increase of 88%.  Notably, this amount of traffic is even higher than pre-pandemic levels indicating a potential sustained, prolonged interest in the state.


Arizona follows the same theme as Ohio.  Pre-COVID it was a growth state with many people flocking there for the good weather and the lower cost of living.  From a pandemic safety standpoint, Arizona provides plenty of space for people and families to spread out at a safe distance.  From the graph below, it can be seen that the search traffic follows a similar pattern:

 Pre-pandemic, from 2019 – 2020, search traffic for the term “commercial properties for sale averaged ~700 searches per month.  Like Ohio, there was a sudden, steep drop in traffic around the time of the pandemic declaration to ~450 searches per month.  Likewise, there is a slow, steady recovery over the course of 2020.

Around the time of vaccine approval, the recovery accelerated, reaching a peak of ~1,300 per month.  From pre-pandemic averages, there was an 81% increaseBut, more importantly, the interest has been sustained at this higher level for the duration of 2021 to date.  This suggests that this level of search interest is not just a knee jerk reaction to a pandemic, but more of a foundational shift in the location of investor interest in commercial property.


Texas is similar to Arizona in the sense that pre-pandemic it was already one of the fastest growing states in the country.  People are attracted to Texas due to its plentiful sunshine, good job opportunities, and affordable cost of living.  As such, it is no surprise that there is a strong level of interest in commercial properties for sale in the state.  What is surprising, however, is the speed at which search interest accelerated post-pandemic.   The graph tells the story:

Pre-pandemic, monthly searches in Texas for “commercial properties for sale” averaged ~3,100 per month.  Again, a sharp dip can be seen at the time of the pandemic declaration, followed by a slow, steady recovery over the course of the year.

At around the time of vaccine approval, search interest accelerated reaching ~5,400 per month, an increase of 73%. Again, this level of activity has demonstrated some level of staying power over the course of 2021, indicating a sustained increase in interest.


Kansas also falls into the category of Ohio, Arizona, and Texas in the sense that it has a low cost of living when compared to the northeast corridor and plenty of space to spread out.  But, Kansas has gone even a step further as one of its major cities, Topeka, has developed an incentive program to lure remote workers to the area.  The terms of the program reward remote workers who move there up to $10,000 as long as they buy a house and make a commitment to stay for at least one year.  Anecdotally, search volume trends indicate that commercial property interest as risen along with the number of relocating digital workers to the area:

Pre-pandemic, average monthly search volume for the term “commercial properties for sale” averaged 262 searches a month.  Like the other states in this list, there was a sharp decrease in traffic at around the time the pandemic was declared and it was followed by a slow, steady, rebound.

At around the time of vaccine approval, there was an immediate spike.  What is interesting about Kansas is that the initial spike was followed by a quick plateau, a small decline, and then another leg up.  At the time of writing, Kansas is averaging 600 searches per month for “commercial properties for sale”, an increase of 120%.  Again, at the time of writing, this increase appears to be sustained at a level that is nearly twice pre-pandemic levels.

Washington D.C

Finally, of the five areas whose search volume grew faster than national averages, Washington D.C. stands as an outlier in the sense that it is a densely populated, major metropolitan area, which is not necessarily the ideal place to live/work/shop in the midst of a pandemic.  However, it is the seat of the US government and home to a number of major companies so commercial space is almost always in high demand.  However, the trends in search volume follow a similar pattern to the US as a whole.  Details can be seen in the graph below:

Pre-pandemic, monthly search volume for “commercial properties for sale averaged ~88 per month.  Again, the graph shows a decline post-pandemic declaration, reaching a low point of ~70 searches per month.

For most of 2020, monthly searches held steady at ~90 per month, but towards the end of 2020, showed a sharp increase to ~157 monthly searches, a rise of 78%.

From a pure search volume standpoint, the increase is minor, but on a year over year percentage basis, the 78% jump outpaces national growth by a significant margin.

FNRP’s Opinions on the Future of Commercial Investing in a Post-COVID World

The data is clear.  After absorbing an initial, swift decline at the beginning of the pandemic, search trends demonstrate that interest in commercial real estate has come roaring back.  This is true both on a national level and at the state level.  In particular, there are five states whose growth has exceeded national averages:  Ohio, Arizona, Texas, Kansas, and Washington D.C.  What is perhaps more notable is that, at the time of writing, search volume in these states has settled into a new normal at levels that are greatly elevated from pre-pandemic declaration.  This outcome suggests that the increased interest in commercial real estate for sale is here to stay.

Despite the surging interest, it isn’t all blue skies for commercial real estate going forward.  The pandemic has driven dramatic shifts in individual behaviors that may be the key to successfully investing in commercial real estate deals of the future.  To that end, we believe that investors should stick to the following points when evaluating CRE deals in a post-pandemic environment:

  1. Fundamentals:  The fundamentals matter more than ever.  Properties should be adequately capitalized, have sufficient operating reserves, and conservative levels of debt.  Underwriting assumptions should reflect market conditions and be fully supported by data.
  2. Sensitivity Analysis:  Pro forma results and return calculations should be “stressed” over a wide range of scenarios to ensure that cash flows can stand up to future economic disruptions on the scale of a pandemic.
  3. Tenant Analysis:  Pandemic driven behavior changes created major winners and losers in tenant businesses.  For example, businesses like hotels and restaurants struggled while grocery stores and industrial spaces thrived.  To ensure that tenants can continue to pay rent, even in a pandemic, it is important to ensure that their business model is strong and resilient in all phases of the economic cycle.
  4. Future Needs:  Because there is so much uncertainty in the present, it can be helpful to think about the future needs of tenant businesses.  For example, we think that the office sector is particularly vulnerable to further weakness due to uncertainty about the sustainability of work from home trends.  We prefer businesses and property types that are on the right side of future needs.  For example, grocery store anchored retail has been, and will always be, a stable consistent performer due to the stable, consistent demand for their products.

Because typical CRE deals have five to ten year holding periods, investors must ensure that their property type, tenant(s), and cash flow are or will be strong enough to endure current and future periods of economic   uncertainty.  This can be accomplished by sticking to the fundamentals, performing sensitivity analysis to cover a wide range of economic scenarios, and working with tenant businesses that are strong and stable both now and in the future.    

Investing in Retail Commercial Property Post-COVID

So, how do these pointers translate into actionable commercial real estate tips for the future?  We offer three.

First, we believe that experiences will be more successful than things.  By that, we mean that investors should focus on tenant businesses who have an experiential component that is difficult to replicate in an online world.  For example, we like boutique fitness studios, quick service restaurants, and nail salons over clothing stores or electronics stores.

Second, flexibility matters.  Retailers must be willing to adapt their business model to changing consumer behavior by offering omnichannel sales and fulfillment options.  On the sales front, channels should include website, social, and in person.  On the fulfillment side, companies should be able to accommodate: home shipment, buy online/pickup in store, curbside delivery, and in store purchases.  Companies that do this well will succeed, which makes them a more valuable tenant.

Finally, we think that it is wise to focus on tenant businesses who will continue to have strong personal health safety measures.  This means plenty of sanitizing stations, wide aisles, enhanced air filtration capabilities, and options for outdoor space.

Investors who are able to find properties that hit all of these points, in markets where there is surging interest, will be well positioned for the commercial real estate markets of the future. 

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