Commercial Real Estate and COVID-19
Over the past few months, we have been living in uncertain times. We’ve seen retailers, restaurants, and other commercial businesses close and social distancing become the new norm to help stop the spread of the COVID-19 virus.
This pandemic may change the commercial real estate (CRE) market forever.
Currently, many businesses are forced to have their employees work from home. For some businesses, they may think it’s a smart way to save money on real estate post pandemic. However, many employees don’t like working from home, especially if there’s many distractions at their home (children, TV, etc.) that keep them from working productively. Also, going to work gives them a reason to get up and get going and allows them to work in a space where they can interact with others. Although it may seem like a great idea to save on rent and other bills, employers don’t want to create a space where employees end up leaving due to not wanting to work out of their home, which is likely not set up for working.
CRE space may begin to look a little different post pandemic, as well. We may see a change in less dense offices and buildings and less open layouts. There may be different standards put in place in regards to standards for HVAC, square footage per person, and the amount of enclosed space, to limit the risk of future pandemics.
Over the past few years, we’ve seen a shift of buying from in-person stores to e-commerce stores, which has increased during the pandemic and may stay high post pandemic due to a change in buying patterns. Although, there will still be a demand for certain businesses where people need to feel, see, or try on things in real life. However, the shift to e-commerce may increase the demand for industrial space.
Like stated at the beginning, we are in uncertain times and the economic impact from this pandemic is still unknown; however, behavioral changes will likely change the real estate market, but to what degree has yet to be seen.
Whether you own commercial real estate now or are thinking about it, stay informed. Take immediate action but look to the future. Think about how your commercial real estate property’s usage may change going forward. Will your renters need larger and more enclosed workspaces? Are your tenants weary of shared spaces?
As you can see, there are many questions surrounding the CRE market at this time as the pandemic unfolds.
If you currently own CRE and have money tied up in it, you may be able to tap into some of the equity, but the lending market for borrowers is uncertain right now.
Right now, most real estate transactions are being put on hold or closings are being extended. There’s a pause in CRE and other real estate markets right now. Deals will still get done; they are just going to look different than in the past during these times.
There could be options for opportunistic investing in 2020 such as properties approaching the end of their financing term or those with troubled operations. During this time, refinance options have become a lot less attractive, which may prompt sellers to just take a discount on a sale instead of taking a loan with low leverage and large reserve requirements.
Real estate is a long-term game. Yes, times are currently uncertain, but CRE is about the long term and rents will get paid and property incomes will stabilize down the line.
Act now and move quickly, and our team of brokers at HOWE Real Estate can help. We have many years of expertise in this industry. We know CRE properties and investing inside and out and can help you every step of the way.
Are you looking for a commercial real estate broker?
If you’re interested in CRE or have questions about CRE during this pandemic, let our team at HOWE Real Estate find you the right CRE investment or help you understand what’s currently going on in the industry. We will work hard to help you every step of the way. We have a great track record, experience in the Louisville area, and understand the CRE market and will help navigate you through it even dring this uncertain time.
As CRE brokers and commercial real estate experts, our team at HOWE Real Estate is happy to help you find a CRE property, whether you’re a seasoned CRE investor or new to this type of investment. We have extensive experience in the CRE market. We can even help you get set up with other CRE experts like accountants, lawyers, notaries, tax experts, and more!
At HOWE, our ability to get creative with new solutions to old problems has made us a leader in commercial real estate. Our commercial real estate brokerage, real estate development and consulting services across all market segments. This includes retail, industrial, office, investments, land, mixed use, development and multifamily.
Let our team of professionals at HOWE Real Estate help you get started on looking for a commercial property for sale. We work with buyers, sellers, lessors and lessees across all property types. To contact us, send us an email or call 502-890-4475.
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