There’s no doubt that many facets of commercial real estate are rapidly changing. Intimacy with technology and innovation has changed the way professionals and business people alike work and shop.
Is it possible to return to pre-pandemic routines? Perhaps the bigger question should be whether people want to go back to the old routine?
Since the pandemic shutdowns many owners of businesses and commercial properties struggled to make their payments since their tenants dropped their rents. If that’s the case, then, why haven’t we seen massive, distressed properties and even foreclosures? Well, the 2020 stimulus and relief programs known as PPP’s and EIDL’s in addition to rental assistance kept cash flowing for many owners of commercial real estate and business owners.
With many people still working remotely nearly two years after the outbreak of Covid-19 began, many companies will need to decide if the costs of keeping their office spaces and retail centers makes sense. Since the inception of e-commerce in the ’90s, both the retail stores and office spaces have been seeing a decline in their business. In fact, the economic trends were showing that almost 35% of companies were offering their employees to work remotely prior to the pandemic. During and post-pandemic that number has increased to nearly 70%.
Property owners of office building and shopping center types should consider updating their properties including and not limited to light value-add and perhaps re-positioning of their assets. Also, we think it may be prudent for owners to diversify their portfolio to various asset classes.
Sources: Withum & Forbes
The opinion is only an opinion of the editor. Please consult with your tax, legal and securities advisor for your investments.
Thank you and working on the future of commercial real estate.