Reading the CRE market change

March 10, 2021
Melody Emrani

Most local real estate markets have experienced conditions favoring sellers for years. Our expanding economy increased demand for commercial real estate spaces. While we all enjoy the economic benefits of strong market performance, it does make finding affordable properties or entering new markets more challenging. That’s why real estate investors live for recessions. Will buyers finally have the advantage in the CRE market?

Buyer’s market factors. Before we can figure out if we are shifting to a buyer’s market, there are a few things we need to know:

What sellers may be desperate to sell?
Will financing be more accessible?
Are product types changing?
Will there be new buyers in the market that have been waiting for a correction?
The economic picture
The current economic landscape is ripe for some disruption to sales activity. It will take time to recover from the record-high unemployment rate and business closures. Several major retail brands have announced a filing for bankruptcy; others ceased operations. Some businesses never will recover. Without question, we will see distressed properties coming on the market.

At the same time, interest rates are historically low and are likely to remain that way as a way of stimulating economic recovery. That encourages buyers to enter the real estate market.
What properties are in demand
We could likely see a shift in high-demand CRE properties. Warehousing, industrial, and distribution markets were performing well in most markets across the nation before March 2020. The increased need for delivery services means demand in this sector is likely to continue. But what about property demand for the medical industry? The office industry? Hospitality? Each has unique considerations by asset type and local market.
New CRE buyers
How about the potential for new buyers? Some individuals may see the recessionary market as their opportunity to buy-in to the commercial real estate market for the first time. We’ll need to know who they are and how to reach them. What asset types will they be interested in acquiring?

Reading the CRE market change
Market change is likely coming as a result of the pandemic. Disciplined investors are prepared for the shift in buying. Part of that preparation is using a connection platform like BuyerVista. It’s a way for new buyers to find the assets they want for sale. It’s also a way for sellers to advertise their properties to all probable buyers.

No doubt some sellers will be desperate to sell in the times ahead. Whether it will be a true buyer’s market remains to be seen.

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