2020 was a rough year for the commercial real estate sector. The need for social distancing led to a distressing domino effect. It left businesses temporarily or permanently shuttered, and landlords unable to collect an income. While we’re not completely out of the woods yet, there’s some light at the end of the COVID-19 tunnel. Here’s what you can expect to see over the course of the year in commercial real estate investing.
Distribution Is King
Ecommerce was growing even before the pandemic, and brick-and-mortar stores were shaking. But when social distancing became a thing, online shopping became the hero. People spent 44% more money online in 2020 than they had in the previous year, showing the highest jump in recent history. Meanwhile, retailers struggled and shuttered as quickly as online stores popped up.
But all this online shopping doesn’t make things appear out of thin air. The increase in shipping goods means a growing demand for distribution centers. Expect to see more moves on this front, especially from larger retailers, and consider investing in warehouses. The Motley Fool predicts that warehouses and distribution centers will fill the void retailers left behind. And if you read on, you’ll see there are already moves in that direction.
Brick And Mortar Is Not Dead
If there’s another thing we’ve learned from social distancing, it’s that a lot of people aren’t very good at it. Many struggled to stay at home and took multiple outings out of boredom. Some protested their inability to get a haircut, of all things. But there’s a silver lining to this: it indicates that there’s still a need for neighborhood retail in our increasingly digital world.
Simon Property Group, who in all likelihood owns the closest shopping mall to you, felt the COVID-19 retail blues hard. Rent from retailers makes up a huge chunk of their revenue – as much as 91% in 2019. But COVID-19 isn’t the only cause of their business woes. Ecommerce was on the rise even before the pandemic, slowly draining the life out of shopping malls everywhere.
But this isn’t the end for Simon. They’re currently testing out new strategies to both revive their industry and seek out new revenue channels. Along with Brookfield Property Group and Authentic Brands Group, they’ve bought up a number of struggling retailers like Forever 21 and JC Penney. But that’s not all – there are talks between Simon and Amazon to potentially replace closed department stores with distribution centers. This could be a win-win situation where Simon brings in more revenue and Amazon adds fulfillment centers across the country.
This could shape up to be a long-term commercial real estate investing opportunity, but don’t discount the old shopping mall just yet.
Go Back To The Office
Offices are still quieter now than they used to be, as many people continue the work-from-home lifestyle. But experts think this will change later in the year.
There are multiple reasons for this. Offices remain a sort of status symbol for workers, and many people will want an escape from the perpetual home life. Many industries aren’t suited for remote work and need to have some form of face-to-face interaction. Some employers may remain skeptical of the work-from-home concept. And finally, people are social creatures and miss social interaction and opportunities for collaboration.
Now can be a good time to look into investing in office space, with an expected long-term payoff.
Promising New Locations
The hustle and bustle of so-called “24-hour cities” takes its toll on many people. That’s part of what’s leading to a population decline in places like New York City, Washington, DC, and Los Angeles. There’s a new category of “18-hour cities” that are drawing investors’ attention.
Eighteen-hour cities are small to mid-size and have above-average population growth with low cost of living and low cost of doing business. Examples include Austin, TX and Charleston, SC. They have the same amenities as the bigger cities but run at a slower pace.
They show promise for many reasons. The population growth will lead to more real estate transactions on the residential and commercial fronts. There are more available properties than in 24-hour cities, at least for now. The low cost of doing business is self-explanatory.
If you’re looking to branch out into commercial real estate investing in new locations, now is a good time to look into quieter cities. It’s also a great chance to take advantage of ProspectNow’s likely seller feature.
Technology and ProspectNow
An increasingly digital world also means more data to work with than ever. With the ProspectNow platform, you can put together your own lead list in minutes, send out emails, and even create custom letters and postcards to send through snail mail.
But one of the most innovative features is the “likely seller” algorithm. ProspectNow uses unique data analytics and machine learning to pick up on trends in properties sold and use those to identify properties that are likely to sell but haven’t yet hit the market. Using this feature and the multiple contact options available to you, you have a chance to reach these prospective sellers before anyone else, giving you an advantage over other potential buyers and the chance to land a great deal.
ProspectNow has a handy ROI calculator to help you figure out how much you could be making if you take advantage of the platform and investigate the likely sellers available to you. Plug in your location, marketing spend, the number of deals closed, and the average amount to find out what you’ve been missing out on.
Ready to close more deals and make more money? ProspectNow leads the pack in more data, insights, and analytics at a lower cost than the competition since 2008. Sign up for a free trial today and get the edge you need to maximize your earnings.