Tips for Increasing Your Agility in Today's Volatile CRE Market

 Posted on December 00, 0000 in Commercial Real Estate

Real estate has always operated in a cycle. Prices and interest rates drop, offering opportunities to seasoned and new investors alike. Then they rise again, causing what is known as a real estate downcycle. In these downcycles, some investors fall to the wayside, either through bankruptcy or because they leave the market in an attempt to preserve their remaining wealth. Others get creative, increase their agility, and manage to hold on to their businesses until the next real estate boom. Learn how you can be a part of the latter group, even in today's increasingly volatile commercial real estate (CRE) market.

Relevancy and Real Estate

Many of the issues occurring in today's real estate market can be traced back to a lack of relevancy. In fact, countless department stores, toy stores, restaurants, and hospitals have gone bankrupt because they failed to stay ahead of the curve or were unwilling to change. The very same thing happens to investors as well. Thankfully, by using the following three strategies, you can decrease your company's chances of experiencing such a fate:

1. Be Flexible - Investors are often reluctant to be flexible with their lease options, and for good reason; short-term leases can alter financial forecasts and real estate valuations, but in a time when businesses are downsizing and controlling their growth to reduce their chance of a bust, inflexibility often results in long-term vacancy of a space. If, in contrast, you focus on filling your space and are more flexible with your lease options (even if it means decreasing the length of a lease, lowering rent costs, or temporarily donating the space to a non-profit), you increase foot traffic, visibility, and interconnectivity for your other neighboring spaces. As a result, your neighboring spaces become more desirable to other, prospective tenants - both immediately, and in the distant future.
2. Build and Nourish Professional Relationships - Relationships are the cornerstone of investing; they help you learn, and they offer you growth and capital support during your journey. That support can mean the difference between failure and success in an economic downturn, especially as banks merge and change their lending focus. Healthy investment relationships are also an important aspect of the next tip, which pertains to diversification of your portfolio.
3. Diversify Your Portfolio - History has shown that economic downturns do not affect all market sectors equally. In fact, some markets may thrive during a downturn. Diversification can allow you to reap the benefits of a thriving market in an economic downturn In turn, you ensure your business is better equipped to weather the storm - perhaps long enough to see the next real estate upcycle.

Contact Our Skilled Naperville Commercial Real Estate Lawyers 

Whether you need help diversifying your portfolio or a new investor wanting to break into the real estate market, Lindell & Tessitore, P.C. is the firm to trust. Skilled and experienced, our Naperville commercial real estate attorneys offer seasoned guidance, protect your interests, and strive to make your job easier. Call 630-778-3818 today.

Source:

https://www.forbes.com/sites/forbesrealestatecouncil/2019/03/07/three-ways-investors-can-increase-agility-in-uncertain-commercial-real-estate-markets/#255fd3bd7b16