One of the most intriguing conversation this year has been about what’s going to happen to offices post-pandemic. While it seems clear that packed open plan offices, hated by many even before COVID-19, will be going away, the fate of the office environment in general is less certain.

In the short term, faced with the need to save money and largely stay-at-home workforces, many corporate employers have been putting some of their office space up for sublease, exploring an urban hub with satellite suburban offices model or declaring they will go fully remote forever. But just like at the beginning of the pandemic many experts were predicting that we’ll work in a world full of plastic dividers and directional arrows forever (which may turn out to be unnecessary once we get to mass vaccination), many “office is dead” forever pundits may be proven wrong.

Already, co-working operators are seeing demand from workers who miss a desk space with no distractions that’s not located in their kitchen, bedroom or living room. Many technology giants at least have actually been beefing up their office holdings, despite encouraging remote working in the meantime (Google, for example, has pushed back its return to the office to next September, but told employees they will be expected to come in at least three times a week after that).

A year of sporadic lockdowns of varying degrees around the country has left a lot of economic damage in its wake. So, it’s no surprise that a lot of properties—most notably in the retail and hospitality sectors—ran into some trouble in 2020. Delinquencies spiked early in the year and stayed close to those levels right through to the end.

A massive drop in travel crushed hotel occupancies and average daily rates. According to an STR estimate from early December, the U.S. hospitality sector was on pace for a dubious milestone: one billion empty rooms for the year. That said, many expect an eventual strong recovery, so there is money chasing hotels. Although owners of properties don’t want to be forced to sell now, at the bottom, if they can hold out for better days.

On the retail side, social distancing health measures forced all sorts of adjustments and shifted more buying online. Although with the hit in economic activity, many Americans cut back on spending entirely to just essentials. It has led to disparities all year with some retailers able to pay their rents entirely while others still are unable to pay at all. There also have been store closures and bankruptcies for many retail chains.

For retail properties in general, that’s leading to adaptations, including converting empty anchors into distribution centers. It also may mean some retail properties convert to other uses entirely.

But despite some of these developments, the big takeaway from 2020 is that there is still a lot of jockeying for position when it comes to distress with not that many deals coming to fruition as of yet. Banks have been able to work with existing owners on forbearance periods, forcing few to sell. And that has proved frustrating to holders of big piles of dry powder that have been amassed to buy assets on the cheap. Ultimately, market experts do think deals will take place. CoStar recently estimated that $126 billion in commercial real estate will be forced to sell at distressed prices through 2022. We also might see a spike in disputes in court between landlords and tenants over unpaid rent before things are all said and done.

Ever since Opportunity Zones were created under the 2017 Tax Cuts and Jobs Act, wealth professionals and commercial real estate pros have been trying to figure out how to capitalize on the tax advantages provided by the zones while delivering the sort of development needed in underserved communities.

For a while, however, opportunity zones seemed to be more hype than reality. Earlier this year—before COVID-19 struck—there were some promising signs with actual developments underway. And affordable housing REIT, aimed at capitalizing on zones among other opportunities, even hit the market. (That IPO was delayed, but was back on track later in the year.)

That was true generally for opportunity zones, where a freeze in the spring began to thaw in the summer. And as 2020 drew to a close, there was more buzz again about the possibilities and about how the program might evolve under the coming Biden administration.

The death of George Floyd in May and the mass protests against police brutality and racial inequality that followed it put a new spotlight on the continued lack of diversity among commercial real estate ranks. There have been some very high-profile success stories of investors and developers from diverse backgrounds making it in the industry, but in general, people of color, women and open members of the LGBTQ community are still vastly underrepresented among commercial real estate professionals.

In response to the newly urgent conversation about what the industry should be doing to make commercial real estate more inclusive and equitable, many firms appointed chief diversity officers for the first time, while others focused on investment ventures that would help Black people and other underrepresented groups reap the benefits of home ownership and wealth creation they have had limited access to compared to white middle-class Americans.

A big debate that emerged throughout the year, especially as productivity among employees working at home turned out to be better than expected, was the question of whether preferences might shift on urban vs. suburban real estate.

Will Americans want more space for home offices? Is there a growing preference for outdoor amenities like patios and balconies that are harder to come by in urban apartment buildings? On the office side, will corporate tenants find it is better to shift some operations to suburban campuses where it would be more cost effective to create more square footage per employee?

There has certainly been a lot of anecdotal evidence on the potential shift. Recent metrics showed foot traffic at urban retailers down by 70 percent.

Rents plummeted on urban apartments with developers offering generous concessions to try and fill new units. And investors made bets on single-family rentals in addition to suburban garden-style apartments and suburban office assets.

Yet the long-term question remains. Was all this activity simply a reaction to the extraordinary living conditions we faced in 2020? Or do they portend a secular shift in Americans’ preferences? It’s a narrative we will be watching closely in 2021 as the pandemic ebbs.

Going into 2020, there was some concern in the marketplace that the industrial sector might be getting overdeveloped. Instead, this year, with a massive boom in e-commerce, the demand for industrial properties on both the tenant and investors side has shot up. Amazon has been snapping up warehouse properties left and right and has even struck a deal with Simon Property Group to open distribution centers at empty big-boxes in regional malls.

Third-party logistics companies (3PLs) have also been massively expanding their portfolios. And traditional retailers not only realized that they needed a more robust industrial support network to be able to successfully fulfill e-commerce transactions, but after experiencing merchandise shortages this spring, that they needed to switch from the just-in-time to just-in-case warehouse model.

As a result, a fifth of all global commercial real estate investment dollars in the first half of 2020 went toward industrial and logistics properties. That interest covered every investor type from REITs to institutional investors to high-net-worth individuals and family offices.

Industrial real estate shined as the strongest commercial real estate sector in 2020, but multifamily was not too far behind.

While there is some question on urban multifamily assets vs. suburban ones (see our slide on that debate for more), on the whole, apartment buildings held up. The COVID-19 relief bill that passed in the spring that featured $1,200 payments and extended and expanded unemployment benefits helped many Americans stay current on rents despite the record high levels of joblessness. NMHC’s Rent Payment Tracker was one measure of that, showing collections fairly close to 2019 levels throughout much of 2020. The delay in Washington in getting a new bill passed and giving Americans the help they needed weakened rent payments as the year wound down. But President Trump over the weekend finally signed compromise legislation that Congress hammered out last week.

On the investment side, buyers of all types continue to target multifamily assets and there were signs that deal volume was growing as the year wound to a close.

There is no question that retail, and regional malls in particular, have been badly battered by the pandemic. First, there were the enforced lockdowns in the spring that prevented malls in many parts of the country from operating at all and led to some unpleasant scuffles with tenants about who should bear the costs for those closings.

But even after malls started re-opening their doors, many retailers were having trouble paying their rents and property owners had to turn creative to make people feel safer shopping in person vs. online with stores that marketed their merchandise in the open air and offered curbside pick-up. That hasn’t stopped massive numbers of mall retail tenants from going bankrupt or liquidating and two mall REITs with lower-tier properties from filing for Chapter 11.

What made matters far worse is that the type of experience- and service-focused tenants mall owners were relying on in recent years to remain internet-resistant—restaurant operators, hair and nail salons, boutique fitness studios—turned out to be the ones the pandemic has inflicted the most damage on. (The perennially out-of-luck American Dream Mall in the Meadowlands has become one of the highest profile victims of this dynamic).

So the fate of the country’s regional malls, already struggling prior to the arrival of COVID-19, remains uncertain and highly dependent on whether the vaccine will make people want to live it up and lead to what some market experts predict might be a repeat of the “roaring 20s.” Of course, the damage to regional malls was not the only story in retail in 2020.

Essential retailers, including supermarket chains and drugstores, have seen a sales boom as people avoided eating out and led to comparative strength in the grocery-anchored shopping center sector, proving once again that necessity retailers are a foolproof choice for landlords.

Despite the massive economic disruption in 2020, one of the saving graces for commercial real estate is that capital markets have remained liquid. While lenders of all types have adopted a more cautious approach and scaled back leverage levels and tightened underwriting standards, they do remain willing to finance both acquisition and development.

A big help was the Fed stepping in quickly to slash rates and revive many Great Recession-era programs and sending other signals that it was willing to backstop the system. The Fed has continued to signal its commitment to those measures. With that assurance, banks, life companies and other types of lenders breathed a sigh of relief and got back to business.

Signs were abundant especially in the latter half of the year. The CRE CLO market showed signs of life. Crowdfunding companies remained active. Debt funds emerged. Anecdotally, we reported on capital being widely available for office and multifamily deals. In short, many observers believe capital markets remain healthy as 2020 ends.