Indoor Air Quality
You can’t get away from this one. Covid-19 brought about heightened awareness and emphasis on indoor air quality (IAQ). HVAC systems play a crucial role in IAQ to maintain healthy and safe indoor environments.
Strategies to address IAQ issues include using advanced filtration systems, maintaining proper airflow throughout the building, maintaining appropriate humidity levels, and using ultraviolet light technology to disinfect air streams.
Innovations in IAQ are leading toward developing more sophisticated HVAC systems that can provide better air quality without compromising energy efficiency. The trend will likely gain momentum as commercial building owners and their tenants become more health-conscious, and regulations around IAQ become more stringent.
Commercial Real Estate
Since the outbreak of the pandemic and the subsequent move to “home office-ing,” the commercial office market has declined. With the recession, building owners and operators have seen continued downward trends in occupancy and revenue over the last two years.
However, with the recession being less lengthy than predicted and employment growth continuing, the NAIOP Research Foundation’s Office Space Demand Forecast predicts a gradual rebound in leasing activity starting in 2024.
The NAIOP research also shows that as current tenants’ office leases expire, they are trading space for quality – leasing smaller spaces in newer buildings with better, modern amenities to help draw workers back to the office.
They also found that though new construction has slowed, projects begun in earlier years continue to reach the market, and will through 2024. The Federal Reserve’s inflation-fighting interest rate hikes seem to have the desired effect. According to their report, inflation has been trending down since peaking in June 2022.
So, this could be great news for Commercial High-Performance HVAC contractors who serve the office building market. Refitting office spaces to accommodate returning workers will mean upgrading HVAC systems to meet new standards in efficiency, IAQ, and more.
However, in an article published by Deloitte Center for Financial Services, a study of their clients shows only a 36% forecasted increase in revenues in 2024 compared to last year. That report says, “With revenue expectations muted for the second straight year, real estate CFOs who participated in our survey plan to continue reducing expenses. Two years ago, only 6% planned to make expense cuts; in 2023, 6% said they’d be cutting. Now, 40% say they plan to further reduce spending into 2024.
“The primary functional areas targeted by respondents for expense reduction will likely be talent (49%) and office space (46%).
According to a report by Richard Barkham, Global Chief Economist at CBRE, commercial real estate investment activity will likely pick up in the second half of 2024. He says the normalization of hybrid working arrangements will continue to limit the growth of office demand.
That and the uncertainty that still surrounds interest rates, at least according to a 2024 commercial real estate report written by Al Brooks from J.P. Morgan.