November 2020 Commercial Newsletter
Here’s What We Can Expect in Commercial Real Estate
With everything that’s been going on in our lives in 2020, it can be helpful to take a breath, step back, and try to get an idea of what this will all mean to us in commercial real estate in moving forward. No one can have the ultimate crystal ball when predicting the future, but at the same time we can all look to the shifts that we’ve seen going on, to better help us in building our map
For example, with all of the jobs that have been getting shipped overseas, who would have predicted a strong resurgence in industrial properties once again nationwide, as this new phenomenon called e-commerce has caused a dramatic shift in the demand for warehouse properties. In addition, under certain conditions, the demand by e-commerce for what is termed “last mile delivery” has allowed for the repurposing of some older industrial buildings, as well as some vacant retail buildings, too.
Then we have the office sector, which is right now dealing with the ramifications from social distancing within the workplace, as well as dealing with people having now had the experience of working from home, as the COVID-19 quarantines within recent months have made this necessary. In addition, with people now continuing to order a higher percentage of their retail products online every year, what will this now mean for the future demand for retail space?
So in looking towards the future, it seems that office and retail properties could be more challenging, while industrial and multi-family properties could be the better bet. Because with apartment buildings, for example, people will always still need a place to live, even though they may no longer be working inside of a commercial building.
With the forecasting for e-commerce telling us that it is expected to continue on expanding, the deally suited industrial and “last mile delivery” buildings should continue to experience good demand.
However, with office and traditional retail properties, it may become more important than ever to have solid, in-demand locations for these, as people will ideally want to rent the best, and if office demand isn’t strong, the older and less-desirably located buildings may need to have reduced asking rates in order to get leased.
In summing all of this all up, there is no one-size-fits-all solution for all commercial real estate investors in every location. What’s important is for you to do your homework and gauge the trends within the local market where you own your property, consult with an expert, and then make your best moves accordingly. Then when you do this, you’ll stand the greatest chance of being thrilled with your commercial real estate decisions, and you’ll make the best decisions for your future, too
Sales of Small Businesses Pick Up in Third Quarter
Early Pandemic Pause Gives Way to Jump in Transactions
By Rohit Diwadkar CoStar News November 2, 2020
In this year of the pandemic, the number of small businesses changing hands so far has dropped 16% compared to 2019, according to data collected by CoStar’s BizBuySell marketplace.
The decline suggests some may have been taking a wait-and-see attitude earlier in the year to assess the effect of the virus on the economy. That appeared to change in the third quarter as many states began to ease restrictions.
Buyers seemed to focus on quality. The businesses that did trade in the third quarter boasted higher revenues and occupied greater space than those sold during the same period a year ago. They also fetched better prices.
Only restaurants showed a decline in revenue among those that sold for the period, and it was only a modest drop.
All through the year, most sales involved businesses that tended to occupy greater chunks of real estate.
The median sale price for businesses sold in the third quarter was $299,500, a 19.8% jump from the same period a year ago. With many businesses negatively impacted by the pandemic, buyers with means appear to be paying a premium for resilient operations that continue to thrive. Buyers and sellers of other enterprises may be staying on the sidelines as they try to assess what a fair price might be during these uncertain times.