Is a commercial real estate recession coming?
- By Jonathan Moore
- November 16, 2020
A commercial real estate recession is coming and in this month’s blog we will focus on the steps you need to take to protect your commercial real estate asset.
Why are we saying “the coming commercial real estate recession” when the US economy is already in a recession? Simply put, commercial real estate values lag the general economy by 2-3 years. With headwinds blowing, there is increasing pressure in the first year, but it takes years for tenants to downside or go bankrupt at times. As a result, CRE, (commercial real estate) experiences quite a delay compared to most industries.
What is meant by pre-Commercial Real Estate recession steps? Immediately, owners should lease any vacancies in their building. The business should take aggressive steps to fill their property and enhance the bottom line now. If any leases are soon to expire, go work out a new lease now with those tenants in trade for many years of lease commitment. You want a full building with many long-term leases with credit worthy tenants. This will get you through the tough times.
Does Sell Today – Don’t Delay seem extreme? Absolutely not. When the general economy fails, investors become much more cautious. This equates to lower property values. The same net Income today will sell for more than the same net Income 18 months from now. Before investor’s caution prevails, get your asset(s) sold. And before your tenants start failing or downsizing, get your asset(s) sold.
Our property management and leasing team is ready to attack your properties and position them well for the coming rough years.
There is limited time left in this robust market. How do I know? I founded my commercial real estate company, Acquisition Consultants, in 1993 and since that time I have helped my clients through numerous recessions. Much like a looming weather storm, I know the signs to look out for and how to prepare.