According to the RCLCO Real Estate Market Index, based on a June 2020 survey of hundreds of top-level real estate executives nationwide.

However, the economic shutdown and global health crisis have hit commercial sectors particularly hard, and some businesses will mend faster and better than others, the report notes.

The pandemic is still playing out across multiple market segments in various ways, says Brad Hunter, managing director at RCLCO. “This isn’t a ‘cycle’ that we’re in—it was a sudden stop,” Hunter says. “Many sectors of real estate leapfrogged entire stages of the normal real estate cycle and went straight to the bottom. The good part about that is, as they say, you can’t fall off the floor. The real estate executives and developers that responded in this survey feel that the worst is behind us, at least for many sectors of real estate.”

Indeed, the RCLCO survey shows that most respondents expect real estate conditions to improve over the next 12 months. But a huge variation exists. For example, the industrial market is one sector that performed strongly during the stay-at-home orders due to an increase in demand for deliveries and continues to do well. Cold storage and last-mile warehousing are particularly strong, the RCLCO survey notes. However, the hardest hit sector is secondary regional malls located outside of the main city, the survey shows. Larger regional malls have also faced a significant downturn. Mega malls, in general, are poised to face major problems over the next 12 months.

In the residential sector, many real estate execs express optimism, with survey participants saying they believe to be past any COVID-19-induced downturn and well into “stable” business conditions. Respondents also say the multifamily rental, active adult, and for-sale residential sectors have already hit bottom from the pandemic and are on the rise, too. Strong household formation rates are expected to resume and drive the demand for new homes over the next 12 months.

But, some second home/resort markets and the senior housing sector are still facing challenging times and may not have hit bottom yet, real estate execs caution. Respondents believe the hospitality sector is approaching or at the bottom of its market cycle as well as luxury and resort hotels. “The largest number of respondents believe that recovery will begin within a year in the hotel business,” the survey notes.

The office sector has felt the rumbling effects of Americans who have jumped to remote work and is still facing a decline. The real estate execs surveyed are mixed on this sector’s chances of recovery over the next year due to economic uncertainties and continued prevalence of the work-from-home trend.