The COVID-19 pandemic has fundamentally changed the commercial real estate market. It has changed how commercial real estate will be developed and used. Certain market segments like warehouse space and distribution centers are actually thriving while other segments like retail and hospitality have seen demand drop drastically. It has been noted that the pandemic didn’t actually create new trends, but acted as the catalyst to quickly accelerate pre-existing market trends.
As most savvy investors know, in times of great uncertainty there is opportunity, and the post pandemic commercial real estate market will exemplify that in much the same way as the economic crash of 2007-2008 did for residential real estate investors. There will be great risk involved, but for those willing to take on the risk there will be the potential for rapid and long lasting growth.
The key phrase for those investors looking to profit from dropping commercial property values will be: change of use. The potential for big profits will be largely found in properties that served one purpose before the pandemic but are now ripe for a change in use to realize their highest and best use going forward. These opportunities will be plentiful as spaces once best used for retail and/or office locations will be re-evaluated to see if a more profitable use is now the wisest course of action. Medical office, industrial, and multifamily housing in the suburbs are all uses that are likely to replace spaces once used primarily for retail and office.
The key to commercial real estate values are businesses that are able to pay rent. Of course, many businesses, especially retail and restaurants, have not survived the last year. Entrepreneurs are not likely to jump right back into the retail and restaurant business in high numbers. Investors in commercial real estate will have to read the tea leaves during the next 18 months, but if they get it right there will be many stories of buying low, rezoning the property, and then selling at a much higher price than the previous property use would have commanded.
Obviously the pandemic has wreaked much pain on our society, spreading death and anxiety for over a year. We are hopefully through the worst of it now. There will be opportunities for those willing to take the risk. The post pandemic commercial real estate market will not be the same as it was before, that much is certain.
We Can Help
Whether you’re looking to lease, buy, or sell commercial property, now is still the time to do it in Atlanta. The Meridian Real Estate Group has been assisting commercial clients for well over a decade and would love the privilege of earning your business. Our goal is not just to help our clients with a transaction, but to support the building of financial legacies through real estate. Call us today at 678-631-1723 or visit us online at www.themeridianway.com. We look forward to serving you.