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What Does the Current Economic Situation Mean for Commercial Real Estate Investors?

There’s no doubt that coronavirus has disrupted much of our daily lives. Just about every industry has been hit by the pandemic, and there’s no sure way of knowing the outcome. So far, residential prices have remained pretty steady, but many expert investors predict that will change. Similarly, the commercial real estate market has been significantly impacted by COVID-19-induced temporary shutdowns, as well as mandatory operational changes as lockdown was eased.

 

The Current Economic Situation for Commercial Real Estate Investors

 

  • Beware of a W-shaped recovery

Although we all hope for a V-shaped recovery, that first “false” bottom could cause misplaced optimism that results in investors overpaying for assets. The release of pent-up demand will undoubtedly cause a quick upward shift, but it may not be sustainable. A virus repeat could cause the W-shaped effect, causing more delay in getting back up and running.

 

  • Acceleration in life and death of certain sectors

Malls and retail parks were already in trouble pre-COVID-19. Shared office businesses like WeWork were also in trouble, and their end may be accelerated. Sectors specializing in data, e-commerce, self-storage, and mobile home parks were on the rise – and are now flourishing. Think outside the box and look for repurposing opportunities.

 

  • Certain industries and jobs will come back to America

It’s expected that tensions with China will continue to increase. Since our dependence on them could prove detrimental, experts predict that there will be a resurgence in some American jobs. This could benefit several types of commercial real estate.

 

Do you have questions about your potential commercial real estate investments? At Fidelity Mortgage Lenders, we’re here to help. Contact Peter directly on PSteigleder@FidelityCA.com or give him a call on 818.422.8879.

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