The colossal shutdown as a result of the spread of COVID-19 has been a shock to us all. However, as society gears up to begin reopening over the coming weeks and months, it feels like a great opportunity to start looking forward. What will the state of real estate look like after the dust settles from COVID-19?
Throughout the reopening process, the retail sector will likely face the most struggles out of all commercial real estate sectors. The problem is simple: landlords are still missing out on a significant amount of rent funds. Shopping centers reported only 48% of typical rent collected in the month of May. As time goes on and the shutdown continues, these businesses will find it harder and harder to keep their doors open.
Uncertainty in Office Spaces
Naturally, the shutdown has created a lot of uncertainty in most sectors of commercial real estate. Perhaps the most uncertain area at the moment is the office sector. While some offices are starting to reopen, they will not be operating at full capacity any time soon. As part of their reopening plan, we expect many offices to either continue working from home or create satellite locations in less populated suburban areas. If the latter takes place, we will likely notice a large jump in suburban office space investments throughout the rest of the year and into 2021.
In many ways, our current economic situation mirrors the 2008 financial crisis. Before government intervention and loan modifications are able to restore the real estate market, investors should keep an eye out for large property discounts. Many commercial real estate owners do not have the ability to withstand an economic stall like this and already have plans to sell their space. The lack of willing buyers may drive prices further and further down and create some excellent investment opportunities as the economy recovers.
Partner with Willowbrook Valuation & Advisory Services for Assistance With Your Commercial Investments Amidst the COVID-19 Crisis
At Willowbrook Valuation & Advisory Services, we are a leader in trusted insight, cutting-edge innovation and customer service. We offer exceptional litigation support to assist clients with insurance valuation, arbitration and consulting, property tax services, and expert testimony. To learn more about our valuation, counseling, or litigation services, please contact us at (202) 919-3888.