Steven Taylor of Los Angeles on Commercial Real Estate in the Age of COVID-19
COVID-19 is changing the landscape of the commercial real estate industry. As the pandemic continues, the industry is being forced to change and adapt. It’s hard to tell just what shifts will stay with us for the long term, but we do know one thing: commercial real estate may never be the same.
What’s different?
First things first, collecting rent in general during COVID-19 has become more problematic. With so many tenants laid off or furloughed, people are struggling. In April, according to the National Multifamily Housing Council, only 69% of U.S. households paid rent on time, compared to 82% who paid on time in April of 2019. But ultimately, multi-family housing isn’t going anywhere. While things have proved to be more difficult for multi-family unit landlords, they will eventually bounce back. People will always need a place to live.
On the other hand, commercial real estate is taking a stronger hit. Businesses that brokers would have once never worried about are struggling to get the rent in on time. Many small businesses, restaurants, and retail have had to move to a different model, shorten hours, or shut down completely. This has left many needing to temporarily or permanently vacate their commercial spaces. Some companies have decided to quit renting office space and move to a work-from-home model permanently.
Even corporate chains have been skipping the rent. Some are using the situation as an opportunity to push back on rent prices and agreements. Subway, Staples, and Mattress Firm are on this list — they stopped paying rent in order to convince building owners to reduce their rent, change their leases, and take other actions.
What is coming next?
Everyone is asking: what happens now? According to Steven Taylor Los Angeles, There is a chance the commercial real estate industry will be changed forever. For many organizations, the suddenly essential need to work remotely has shown them that it is possible to save a significant amount of money by passing on office space. In the past, CEO’s often questioned if their employees could maintain productivity from home, or if their business would suffer without an office environment. But now, they’ve seen that their teams can handle it…and are even thriving.
So, what happens next? We’re not sure yet. This trend could lead to less demand for office spaces. It could also mean that office rentals just look different. Not every team can work from home forever. As things open back up, there will surely be companies who will need spaces that can be configured to meet COVID safety regulations. As the economy slowly starts moving again, we may see a jump in activity where brokers are able to start renting more properties again.
Either way, there is still a good chance that the market will go down as select companies drop their leases and more space becomes available. All we can do is our best to stay positive. The goal is to retain as many tenants as you can, and hopefully attract new ones. Part of that process will be continuing to learn. As a commercial real estate investor, you will need to be constantly researching and staying up on the latest industry news. Know your regulations. Know the safety measures. If you help keep your tenants feeling safe, it can increase your own chances of staying afloat.
Originally published at https://www.reddit.com.
Steven Taylor of Taylor Equities 