Meanwhile, structural tailwinds like the accelerated shift to e-commerce are benefiting some real estate sectors such as industrial and boosting new ones such as cold storage, Mr. Karlekar said.
“Now the U.S. consumers have driven e-commerce grocery as high as it is in the U.K., which is one of the highest e-commerce grocery markets,” Mr. Karlekar said.
Cold storage demand is expected to continue ramping up significantly over the next few months as people buy more groceries online, Mr. Karlekar said.
Data centers is another property type that has benefited from the pandemic as people have become more data dependent, he said.
Niche real estate sectors such as data centers and medical offices will grow to be more mainstream in 2021, Mr. Karlekar said.
Ms. Lyse agreed. “These assets will become perhaps not completely mainstream but less alternative than they used to be. The interest for life science and medical centers has clearly been spurred by the pandemic. People realize these things are important and there is now a huge interest,” she said.
Eaton Partners’ Mr. Martenson said a number of real estate managers have been buying and creating portfolios of car washes, especially in the Southwest U.S. where people have been moving during COVID-19. The managers see embedded value in these properties and expect to realize returns when the economy bounces back, he said.
At the same time, office — one of the main real estate sectors “is a pretty challenging space, if you look at value,” Mr. Karlekar said. It’s hard to value office properties because there have been so few transactions, he added.
Looking at real estate investment trusts as a harbinger of what might happen in the private real estate market, there have been some REITs with New York and San Francisco office properties that are trading at fairly discounted levels, he said.
In Principal Real Estate’s view, 2021 will be a year of price discovery and portfolio rebalancing for the office sector, Mr. Karlekar said.
The pandemic has rekindled an argument around whether there is an exodus of people from the cities to the suburbs. Principal executives think the movement to the suburbs could be temporary and reverse should employers decide to pull their employees back to the office, he said.
“Gateway cities are having a moment of crisis, but they will always be resilient,” he said. Even with Brexit, “I would be a fool to write off London and say London is finished,” Mr. Karlekar said.
Managers with exposure to suburban properties say the tide is turning in their direction.