Timeline for Recovery: From Zero to Q4’s "Sugar High"

The economy may not go zero to 60 in the first quarter, but good news is on the horizon: according to a recovery timeline created by Cushman & Wakefield, it will gradually build up strength over the course of the year to what is expected to be a robust recovery. 

But first, the bad: we’re a few days into March and it’s clear that COVID-19 pandemic will continue to wreak serious damage to a variety of sectors in the first quarter, as new variants drag down confidence. And while a new aid package is on the way, Cushman economists predict the virus will continue to constrain sales activity in most parts of the world. 

Once we hit Q2, restrictions will continue to loosen and the pace of vaccinations will pick up, quickening the recovery. Cushman predicts global real GDP will push toward 5% growth, and that occupiers will become “more active”—though thanks to WFH and travel limitations, leasing will improve more modestly.  C&W experts also predict that investor activity will pick up, which will reset pricing and lure sellers to the market.  

Once enough people are vaccinated, interest will begin to resume in the office and urban residential markets in the US, and already-strong investor demand is likely to remain high for logistics and suburban residential product at that time. Banks will also become more active as early as Q2, making the debt markets attractive for investors in the U.S.

By the third quarter, officer workers will begin returning to physical workspaces in North America and Europe. (This will likely be welcome news for downtown office landlords, who may experience demand drops of up to 20% this year, by some estimates.) Travel will slowly come back and confidence among occupiers and investors will increase, with a large portion of the global economy hitting pre-pandemic outputs. The logistics, residential, and life science sectors are currently the “pandemic winners,” but office and retail will become “interesting risk-adjusted bets,” according to Cushman experts: “Polarization looms in all sectors as changing working, living and shopping patterns continue to disrupt the status quo.”

And by Q4, according to Cushman, “the global economy is firing on all cylinders, though it will still take some time for global labor markets to fully recover.” The firm’s economists predict that pent-up demand and loosened financial and credit markets will result in a “sugar-high” recovery that contains far fewer distressed opportunities than in the Great Financial Crisis. By year’s end, the market will be “extremely dynamic.”