Creating Opportunities in A Difficult Commercial Real Estate Atmospher
Over the past couple of years, there have been several disruptions impacting the commercial real estate market. Regardless, experts at Mountain West Commercial Real Estate say it is best to always review whatever holdings you have to better position yourself.
According to an article from Forbes.com, there have been investment groups saving cash to acquire what is, in their opinion, imminent distressed assets.
“The pandemic disrupted normal commerce and the nature of work, crippling the supply chain. The economy is also in the tortious act of trying to decarbonize and finding out that it is much more complicated and fraught with self-interest than planned,” said Michael J. Polk.
The following are some ways agents can create opportunities in a tough CRE market.
Generational Shift
It is common for commercial property to experience a generational transfer. The next recipients of these properties are very different than their parents and thus view owning property in a different light. According to Forbes, millennials overall prefer cleaner and more progressive values. The Salt Lake City market is experiencing something similar. Agents at Mountain West say due to the pandemic various legacy assets are being acquired.
Refinancing
Throughout the Mountain West region of the U.S. and specifically Utah, properties are soon to be due for refinancing. Right now, the Mountain West region is experiencing some of the highest inflation in the nation, so landlords will be refinancing at a higher rate than originally expected.
“I see this bringing forth much more scrutiny in the underwriting process and a possible inability to accomplish certain financial conditions to sell,” said Polk. “Not to mention, if you are an operator of residential income property in many parts of the country, eviction moratoriums could also chill opportunities to refinance or sell”.
Cash Deals
According to Forbes, a buyer should be able to secure bargain prices if the transaction is paid for in cash.
“The competition will be steep from corporations and hedge funds seeking to create yield from the same situation; getting the deal won’t rest on just having cash,” said Polk. “As a smaller investor, you won’t have the level of cash deployment”.
Utah lawmakers are considering legislation that would help increase local housing stock, and rent stabilization is of the utmost concern for many areas.
