The last two years have brought serious changes and challenges in the commercial real estate and investment market.
The pandemic and resulting economic issues have shifted the way people use and interact with commercial real estate. Offices, gyms, storefronts, hotels, are all affected by the changes the pandemic brought.
Some people think these challenges in commercial real estate trends spell the decline of this investment vertical, but smart, savvy investors see these changes simply as new opportunities to leverage.
In fact, many of the changes to commercial real estate attributed to the pandemic have been slowly in motion for years. The past two years have done nothing but speed up the inevitability of large shifts in commercial real estate and have opened up new, exciting opportunities for serious real estate investors.
Here’s an overview of the big-picture changes in three of the main areas experiencing a market shift – office space, retail, and hospitality – and what new investment opportunities these changes will bring.
1 – Work from home has transformed office spaces
Work from home is not a trend started by the pandemic. Over the past ten years the remote work trend has seen an increase and only accelerated work-from-home opportunities and remote options, especially in the tech sector.
While the pandemic has certainly escalated this shift from working at the office to working at home, exemplified by large companies like Twitter announcing that they are going 100% remote, the desire to work remotely has only increased.
What does this mean for investing in office spaces?
While companies are still leasing office space, the layouts are completely different. Before, companies favored communal working in large open spaces, and shared amenities like lounges and gyms. Features that are sought after in office spaces today include small, private spaces for employees as well as safety measures like state-of-the-art air filtration systems.
In addition, the need for coworking spaces has blossomed. These types of office spaces are worthwhile real estate investments, because they serve a wide variety of workers – entrepreneurs and small businesses, as well as the newly remote workforce.
With many companies offering a coworking space budget to their employees, you can maximize your rent per square foot in these spaces, making coworking spaces a lucrative and long-term investment.
2 – Retail is not dead, it’s just shifted to online
Experts have long warned about the “death” of retail, and like many sectors of real estate, the decline of retail spaces has certainly been accelerated by the pandemic. But make no mistake – retail is not dead.
The volatility of retail space, specifically storefronts, is not new to the last two years. In every recession or seismic shift in consumer habits, local businesses and small “storefronts” are the first to go out of business, leaving investors with empty properties.
While some storefronts continue to decline, the increase of online shopping has led to a demand for more and more warehouse space. Throughout the pandemic, warehouse investments have remained steady, making them an excellent choice for future real estate investment opportunities. These warehouse spaces continue to be occupied and are a great investment due to their relatively low cost per square foot, which means an even bigger ROI, and the steady income they produce.
3 – People are still going on vacation, they just want to be left alone
The industry hit hardest by the pandemic has perhaps been the hospitality and travel industry, with hotels being some of the slowest to recover. Even as vaccines have allowed for travel again – flight purchases, hotel bookings, etc. – the tourism industry is notoriously slow to catch up. However, real estate investment in the hospitality industry is increasing and this sector is seeing a resurgence.
How to capitalize on this hospitality trend as a real estate investor? Pandemic-thinking has led to an increase in smaller, boutique hotel bookings and the prevalence of Airbnb’s, rather than staying at a large resort with hundreds of other guests.
The pandemic has accelerated this shift away from hotels and towards Airbnb rentals, with travelers preferring the peace of mind of being able to isolate themselves away from others. As such, Airbnb has found a niche in the hospitality industry with travelers preferring to stay in residential homes that are often less expensive and more private than typical hotel stays.
All this means that investing in smaller properties, boutique hotels, or income-producing homes that can serve as Airbnb’s can be especially lucrative. Consider what travelers prefer when investing in hospitality-related real estate investment, either large properties that feature luxury interior design and perks like a pool or hot tub, or properties located in the heart of the city center, close to tourist attractions.
At Community Capital Holdings, we know that the face of real estate investment is ever-changing bringing about exciting new opportunities for investors to take advantage of, and our private real estate lending company is always evolving alongside it.
Florida has been at the forefront of many of these real estate changes and market shifts, with many savvy investors already taking advantage of these new opportunities. We know the Florida real estate market better than anyone else, and we have a keen eye for which investments make sense.
With over 120 years of combined experience, we have helped thousands of borrowers reach their real estate investment goals and value the relationships we have built along the way.
Community Capital Holdings is well-capitalized, highly regarded and capable – using our connections and experience to get you the answers you need within 24 hours.
To learn more about the state’s strong real estate market or investing in real estate here in Florida, contact us via email or by calling (954) 947-1232.
