During the COVID-19 pandemic, tens of thousands of businesses across the U.S. were forced to shut down for a range of reasons. In many states, only businesses that were deemed to be essential were allowed to operate. In other states, stay-at-home rules kept people from frequenting commercial businesses. In still other instances, businesses simply had to shut down out of a lack of labor-based resources. The reasons vary from one place to another, but the facts remain the same; commercial real estate suffered as a result of the pandemic.
Now that the pandemic is over and the U.S. seems to be recovering, “there is more hope for commercial real estate,” says Joe Fairless, co-founder of Ashcroft Capital and host of the popular podcast Best Real Estate Investing Advice Ever Show. “Commercial real estate depends on the success of commercial enterprises, and that sector is improving daily.”
Opportunities Abound
The first thing to know about investing in commercial real estate post-pandemic is that there are more opportunities than there have been in recent decades. “While residential real estate prices have been driven up, commercial real estate has dropped,” Joe Fairless points out. “This is simple economics. Demand for housing has increased, while demand for commercial space dropped when companies were forced to shutter their businesses. If you took experts’ advice and pooled your cash resources, you should be able to take advantage of lower commercial real estate prices without borrowing too heavily.” The increase in interest rates makes borrowing less favorable, but by paying cash—or at least a bulk sum in cash—now for commercial real estate, investors will likely be able to enjoy great returns on their investments in the coming years when commercial real estate increases in value.
The Time to Act is Now
“The key to all of this,” Joe Fairless explains, “is to act now. Right now, companies are just starting to ramp up again, especially in Texas. They’re looking for retail and office space that can accommodate their changing needs.”
In addition, entrepreneurs are now less hesitant to get their business ideas up and running, so they will also be looking for commercial space to operate. Commercial real estate investors need to anticipate what companies are looking for and then make sure they buy properties that meet those demands.
Changing Needs in Commercial Real Estate
Experts are advising that companies aren’t necessarily looking for large spaces. Instead, their focus is on being able to accommodate servers, have high-speed internet and collaborate in workspaces. Think about investing in strip malls and smaller commercial spaces. Attention also has to be paid to the fact that more employees may be working remotely, on a part-time basis. This means that desk or cubicle space needs to be available, but it needs to be flexible, to accommodate different employees on a rotating basis.
This is a rare, once-in-a-lifetime chance for real estate investors to get in on an up-and-coming demand, even in the midst of record-setting residential real estate. Focus on commercial real estate investing for the short term and see the potential for impressive growth in value in the long term.
