Coming from a year that was characterized by slow economic growth due to the Covid-19 pandemic, the commercial property market has to re-evaluate its focus in 2021. Traditionally, the commercial property market presents exciting opportunities for investors. But it’s also a fragile industry that’s easily affected by social, political, environmental, as well as economic factors. The decisions by property owners to buy or sell properties also affect the market to a large extent.
As the world focuses on Covid-19 recovery in 2021, here are some tips to help realtors in the commercial property market succeed in 2021:
Understand the Commercial Property Market
To excel in the commercial property market in 2021, you’ll need to understand the characteristics of the market post Covid-19. The best way to do this is to assess the market for commercial real estate in your region to determine the demand that’s currently there. As you assess demand, pay attention to the quantity and type of properties that buyers are looking for and the amounts they’re willing to spend on them.
You’ll also need to determine how rare those properties are in the regions that you focus on. Other market aspects that are useful to understand are utility – whether the property is suitable for use – and transferability, which involves checking whether the property can change hands legally.
Real Estate Financing
Financing is an important component of commercial property market and it’ll have a significant impact on the industry in 2021. But, despite the pandemic, the global commercial property lending market is set to grow significantly in 2021 as governments focus on maintaining low interest rates to boost economic recovery.
In the US, for instance, the Federal Reserve is expected to advance a monetary policy that’s largely accommodative to enable real estate lenders advance loans at low interest rates in the short-term. This deliberate move is expected to provide commercial property borrowers access to credit on favorable terms - you can discover more here. This will go a long way in boosting economic recovery rate.
Pick A Specialization
Realtors can specialize on a wide range of commercial properties including retail, offices, industrial, and property brokerage. However, as economies across the world work towards recovery, it’ll be helpful for realtors to decide which of the four key markets to focus on. If you decide to focus on retail real estate, you need to be prepared to deal with high turnover that are often fueled by high failure rate among new retail businesses.
To boost your chances of success in this space, opt for properties in strategic locations and have food amenities. You also need to have a grasp of the demographic and economic status of your target audience. If you decide to delve into the office category, you’ll need to understand the needs that lessee will be looking for including the kind of space they need and the amenities that businesses require to succeed.
Even though class A spaces may struggle in 2021, there’s a chance that the class and other office classes will perform exceptionally well as the year unfolds. Demand for micro-offices will increase as more people launch their businesses online and only seek locations with little distractions. Industrial property market took hard hit in 2020 and in the year 2021, this niche will begin to recover steadily. To succeed in this market in 2021, realtors will need extensive expertise to handle zoning, environmental issues, and legal issues that characterize the sale and lease of industrial property.
Adapt Property Tech
Property tech is an emerging category in the commercial real estate market to boost efficiency in asset and building management. In 2021, the commercial property market will apply property tech to monitor a wide range of data points including replacing physical signatures with smart software and boosting operational efficiency in commercial buildings. Besides applying tech in management of commercial property, the market will also experience advancements in construction designs and materials. This will be manifested in increased production and adoption of pre-fab constructions to reduce cost and cut down on project timelines.
The commercial property market across the world will be going through a unique period in 2021. Characterized by a focus on economic recovery, the commercial real estate presents a mix of opportunities as well as challenges for realtors. To succeed in this space, realtors will need to leverage the favorable credit line that governments make available to the industry, narrow their focus and specialize on a single property type, and learn as much as they can about the industry in their context.