Commercial Real Estate: Adapting and Overcoming (2020)
Ask ten different commercial real estate professionals what will happen to the market due to COVID-19 and you’ll probably get ten very different answers. Articles on the subject abound with phrases like “sudden and significant,” “market risks,” and “uncertainty.”
Many articles try to tackle commercial real estate as a whole, but commercial real estate is a vast topic. It encompasses everything from large investment REIT’s to small local landlords. It includes all property types, from retail, office and industrial buildings, to multifamily, to commercial lots and development land. It covers both investors and users, as well as tenants. In addition, the topic includes all markets, big and small, from New York City to Bloomington-Normal. There is no single answer as to how COVID will affect all these different players.
It is largely a matter of perspective. Yes, there has been a significant public market sell-off of certain types of properties. Yes, the retail market, which was already struggling, is taking a harder hit than some of the other commercial property sectors. And yes, there are plenty of nervous landlords and tenants, worried about rent payments. But what is happening here in our community? Will we see major fall out in our commercial real estate market?
People ask me all the time how our market is faring, and the truth is, it’s too soon to tell. We’ll know more in six to twelve months, but the initial indications are surprisingly good. Activity was strong in April, but much of that was due to momentum from activity happening prior to COVID. However, as we move into the summer months, activity remains healthy, with buyers and tenants touring and making offers on properties that were available long before the pandemic hit.
Things will change. There is no question about that. Some changes will be temporary, and others will be permanent. While change does cause uncertainty, it doesn’t necessarily mean a net negative. It will be difficult for some businesses, while others will thrive. Negative shifts are frequently balanced by positive shifts elsewhere. Airlines, hotels, brick and mortar retailers, and others will have to work hard to redefine themselves, but on the flip side, opportunity will abound for delivery services, video conferencing hardware and software, e-learning platforms, etc.
Adapting to new requirements will be key, but there will be plenty of businesses that do so successfully, as well as new businesses that seize fresh opportunities. Bloomington-Normal has a history of resiliency, and this chapter in history will be no different.