The COVID era is affecting us all, but its impact on real estate is uneven. In any economy, certain real estate sectors move more than others, and today’s uncertainties are no different. Reliable, expert advice is key to successfully navigate the challenges today’s market presents to buyers, sellers, landlords and tenants.
“We’ve been talking nonstop to clients, all of whom have different goals and challenges, but all of them are impacted by today’s market uncertainties,” says Eliot Kijewski, senior vice president at Cushman & Wakefield | CRESCO Real Estate. “Anyone that says they have all the answers during these unprecedented times is posturing. But we can improve a client’s position with data, experience and the benefits of knowing what else is happening in the market.”
Smart Business spoke with Kijewski about the importance of expert advice in an uncertain market.
How is the market affecting buyers?
This market is tough on buyers because of the lack of real estate inventory — the available spaces for businesses to move and grow with ease. The record-low 3.8 percent industrial vacancy in Northeast Ohio makes it a crowded field for tenants looking to move. Low interest rates put more pressure on demand as buyers are searching aggressively as well. Despite COVID impacts in other real estate classes, industrial real estate remains in high demand for manufacturers and distributors that are changing and growing in response to changes in the economy. In many instances, these changes have become localized.
When a property is for sale or available, it goes fast. In many cases, landing a property in this market means finding an off-market transaction, or uncovering hidden availabilities. That’s where deep experience and a broad network are most valuable.
Moving fast can also create haste, and due diligence cannot be overlooked. Increased demand and COVID-related challenges have made it tough to quickly examine a property. A knowledgeable real estate adviser, however, usually has strong relationships with those professionals to ensure excellent due diligence with reasonable turnaround to not jeopardize that hard-to-find property.
Real estate agents have exclusive means to show properties to help with COVID sensitivities and eager buyers. Sometimes a well-known agent ican get prospective buyers in to see a property early. Others have used virtual and video tours to showcase a property so prospects can be safe and see available properties in a timely manner.
What does the market look like for sellers?
Sellers are seeing increased demand and the market is responding with higher prices. These conditions have also created an opportunity for owners to leverage their property to capitalize on the market while largely staying in place. Industrial real estate prices are as high as they’ve ever been per square foot, but finding available properties is a challenge. That’s created opportunity for owners who are willing to think outside the box to capitalize on the market.
Owners of office properties may be able to increase the value of their real estate if they’re able to adapt it to an industrial use. This won’t work for some office buildings, multi-floor buildings, for instance, but if it’s flex space or industrial, owners should convert as much as they can to shop space.
There are lots of indicators that suggest office properties won’t realize anywhere near their historic values anytime soon. But with high demand for industrial property, the faster a landlord can convert their building to something that has utility to an industrial business, the greater their chances of realizing a high price in a sale.
What’s the best way to navigate the uncertainty in the real estate market?
Experienced real estate advisers can work with landlords and tenants to find a way to reshape existing agreements, making them more comfortable for both parties at an uncomfortable time. They can work with sellers to advise them on how to reimagine their office properties to get top dollar in a hot market, and they can give buyers an upper hand because what they want or need isn’t likely to be found with a web search.
In a time of uncertainty, it’s best to have expert advice and guidance to resolve difficult challenges.
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