Demographics guide real estate investment strategies. As the coronavirus pandemic stalls the global economy, creating a deep recession and accelerating long term strategic shifts in behaviours, there is great uncertainty about what life will look like on the other side. 
In a matter of weeks, our daily routines have been transformed and work-life balance reset as office-based employment moved online, schooling became virtual and online shopping permeated deeper audiences than ever before. Many of these cultural and societal shifts were already underway, but the introduction of lockdown has helped enforce these changes on a much larger proportion of the population.
Whilst this uncertainty means it will be difficult to discern future behaviour, an understanding of long-term demographic trends in life after coronavirus will help to signpost future changes in how we use space across sectors and geographies.
Work
In unprecedented numbers, office-based employment has migrated to the digital and cloud sphere, with entire businesses using video conferencing, testing virtual capacities, bandwidths, server loads, and operating with zero physical face-to-face contact.
It is too early to predict long-term changes, but an accelerated cultural shift to remote working could radically modify overall office demand. With executive Baby Boomers and Gen Xers witnessing the first mass trial of remote working, flexible office practices appear more feasible and potentially more desirable. Depending on the duration of the virus, social distancing measures will limit workforce densities, and employees may be required to rotate in order to comply with space and travel restrictions. This will affect what space requirements could look like for the duration of the pandemic and beyond.
Life
Following Covid-19, two main factors will help define residential space occupancy—changing lifestyle preferences and affordability. Extending the amount of time spent at home might spawn a penchant for space and outdoor accessibility. This includes a requirement for workspace in the home that may spur a reconsideration of apartment layouts and the desirability of apartments in the first place.
A deep and most likely protracted recession will mean a loss of jobs, income and wealth. Economic contraction will ultimately translate to challenges with deposits and with accessing mortgage financing. With owner-occupier tenure less affordable, innovative solutions such as rent-to-own or shared-ownership structures could provide a partial equity solution, particularly to younger generations and first-time buyers. For investors, such structures could provide an annuity coupled with a fixed investment exit.
The need for appropriate rental accommodation is clear. In the wake of Covid-19, owner-occupier demand could shrink while the total number of households across Europe expands. It may fuel a material increase in a single-family rental market, which has hitherto largely been a US phenomenon. On the other extreme, there could be a spurt in demand for “micro” units catering to individuals and short stay long-distance commuters. Continued migration to vibrant geographies has placed pressure on affordability but may provide new opportunities for investment. Each generation will likely require a different or flexible solution.
For Gen Z, newly entering the workforce, the repercussions of the virus will morph their perceptions, behaviours and they may opt for micro-living and co-living solutions due to affordability challenges. For older generations, the demand is clear for assisted living and nursing care facilities with an increasing focus on urban-proximate locations.
Retail
COVID-19 has delivered a new set of consumers to the online frontier. Restrictions imposed by national governments have resulted in reduced accessibility to shops and provided momentum for e-commerce. But this has come with operational challenges for logistics companies and tighter margins for omnichannel retailers and the entire motor industry supply chain.
Although greater penetration into new online markets suggests a shift in norms, Covid-19 is not necessarily the nail in the coffin for retail. Certainly, shopping habits have altered even in southern European countries in response to the pandemic, with a larger proportion of the population reporting a decline in supermarket shopping. We are more optimistic, however, that cities with vibrant centres that have historically occupied key roles in trade and commerce are likely to bounce back once the pandemic is brought under control.
However, the relationship between physical and internet commerce has probably altered and we expect that the rapid expansion of e-commerce amongst older users is likely structural. Direct consumption from click and collect and home delivery will continue to flourish the longer these practices are the norm. Logistics along transport corridors, strategic warehousing and last-mile, urban periphery locations will be most resilient. The industrial sector, which has benefited from the tailwinds of e-commerce, may find itself in the enviable position of an even greater structural shift in its favour in the coming months and years.
Indraneel Karlekar is senior managing director and global head of research and strategy at Principal Real Estate Investors. The views expressed above are his own and should not be taken as investment advice.