When you read the news, an image of dark clouds forming overhead for the Commercial Real Estate (CRE) market is unavoidable. “Employers questioning if office space will ever be needed again.” “Millennials don’t want to return to the office after the pandemic.” “Retail shopping in brick and mortar structures is on a permanent decline.” “Big Box Stories and Malls are dying.” “People can’t afford to live in apartments.” “Everything is overbuilt.”
The landscape for CRE is shifting, but in that shift many companies are seeing opportunity. Despite the dire projections of the media, CRE companies are making investments in the future. Here are four examples:
Big Box Stores Reborn – Newer business finds bargains in purchasing abandon Big Box properties and repurposing them to serve evolving market requirements.
The Big Flip – Multi-Family properties owner is selling off 75% of their portfolio. They are using this opportunity to transition from Class B properties to Class A properties. They feel the short-term selling opportunity is strong and the intermediate term buying opportunity will be fantastic.
Thinking Fast and Small – Office buildings owner creates ready-to-go suites in existing buildings that can be occupied in less than 30 days. Lease periods are much shorter than normal to provide flexibility.
Grow Baby Grow – Large CRE owner in multiple property types is strategically bargain shopping in the market and making additions to strengthen all their portfolios.
Some CRE companies are definitely struggling in this economy, but we are amazed at the companies making strong moves to take advantage of opportunities they see. We do not have a crystal ball, but we are confident that 25 years from today, there will still be robust Office, Multi-family, Senior Living, Retail, and Industrial property owners. The models will change as will some of the names, but the CRE companies will find a way to make money for their investors. They are just too creative, to deal-oriented and too driven to do otherwise.
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