The Implications of COVID-19 on Commercial Real Estate

The Implications of COVID-19 on Commercial Real Estate
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Commercial real estate investors should always be ready for crises that impact the market. Those who have weathered storms like the Great Recession may understand the potential implications of a crisis like COVID-19. 

However, there are a few things that make the post-COVID-19 world, especially the commercial real estate industry, very different. Learn about these differences so you can be ready for your next commercial real estate project. 

Breaking Down Commercial Real Estate

Commercial real estate breaks down into two categories based on its asset price and property type. These types include functions such as retail, hospitality, industrial, or office use. 

COVID-19 has impacted several areas of the commercial real estate market and will continue to display different pandemic indicators.

The Four Types of Commercial Real Estate

Perhaps as most people would expect, the two industries that have been impacted by the pandemic the hardest have been retail and hospitality properties. However, it is not universally true that all retail and hospitality properties are faring poorly. 

While some businesses have seen decreased sales or even had to temporarily close due to COVID-19, others, like grocery stores, have seen steady sales. Likewise, while hotels catering to high-end clientele such as those traveling for business are seeing lower numbers, others such as limited-service hotels are doing much better.

Among the areas that have seen the least amount of impact are multi-family properties and industrial properties. Rent collections at multi-family properties have remained high. Meanwhile, industrial buildings such as those used to store and ship packages for online purchases have seen little to no impact

When looking into your next commercial real estate venture, it’s important to take a deep look into what type of commercial real estate you want to invest time and money into, especially as rules and regulations around stay-at-home orders shift and vary by state. 

Out of Office: How COVID-19 is Changing Office Spaces

Perhaps the area that has seen the most discussion is the standard office building. During COVID-19, many office workers began working from home to comply with stay-at-home orders. It is expected that many more businesses will begin to make more of their employees work from home permanently. However, nobody knows if the reduced need for office space is only temporary.  The need for a standard workplace environment may return. 

On the contrary, the emphasis on social distancing may increase the need for more square footage for businesses. Even with fewer employees returning to offices, companies will try to mind social distancing recommendations. 

This could translate into many other areas of commercial real estate as well, though it is still difficult to see if this is a trend that will continue on into the future or if it too is only temporary.

Overall, it is important to remember that now is still a great time to invest so long as you are aware of the current marketplace. While COVID-19 has impacted many facets of commercial real estate, there are segments such as industrial properties that have surpassed expectations. 

Your Partner in Your Commercial Real Estate Journey

At Bay Mountain Capital, we consider ourselves partners in your real estate journey. If you’re unsure of your next move during this time, feel free to contact us for advice. 

We’ve weathered many storms, including the Great Recession, and we can help you forecast your next real estate success! Reach out to us today or fill out a quote request to get started on your next commercial real estate project.

About Bay Mountain Capital:

Bay Mountain Capital has been in business for more than a decade, closing approximately 2,000 loans. We specialize in financing all types of residential and commercial property investments throughout Texas and Georgia. Using common sense and value-added approach, we strive to incorporate these principles into our underwriting and closing processes.

As a direct lender, Bay Mountain Capital can close a loan within one day after receiving a complete file and clear title. The process generally takes two weeks for a residential loan but can be accelerated where circumstances require it.

We are primarily an asset-based lender. This means that we have limited qualification requirements. Our rates and fees are among the lowest in the industry.

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