2020… what can we say, I think I can speak for everyone, 2020 has been, even in this three short months, the most surprising, heart breaking and turbulent times we have had in a long time. This Corona Virus has officially turn our bull market upside down. Unfortunately, for so many this will hurt a lot of people. So thinking about how this effects the commercial real estate space is not a top priority for a lot of people. But this does have an effect in key areas for commercial real estate. The three ways that this virus effects the commercial real estate market are: 1.Powder is staying dry 2.Hotels are in trouble 3. Opportunities in this market.
1.Powder is staying dry, with the market changing as fast as it has you can see a lot of commercial investors staying on the sideline or even pulling out of deals. In an article on ChicagoBusiness.com. Chicago’s Origin Investments had $241 million in apartment deals ready but now that we have this situation on our hands, they decided to put a pause before closing any deals because they think the price will come down on some of the opportunities.
2.Hotels are in trouble. Big time. Because of this virus we are seeing the effects not just on health but on the hospitality industry as well. According investment management firm American Realty Advisors. We can see a bailout of the hotel industry just as we are seeing with airlines. Also another sector to keep an eye on is shopping centers without an Grocery store anchor. Those could be in trouble as well.
3. In any downturn there is alway opportunity and because of the uncertainty in the market this could be the right time to keep an eye out. Tenants could be losing jobs and not being able to pay the rent so this could cause a backlash to landlords and cause them to sell at a decreased value. This is why we are seeing a spike in refinancing as well. This is the time to get capital ready and keeping our ear to the ground.
Even though this is troubling times and is changing the landscape. This is the time for smart commercial real estate investors to keep the powder dry, get capital ready and plow into opportunities that don’t come around too often.