COVID has had a devastating effect on the commercial real estate business. Once a booming and exponentially growing sector of the market, many commercial offices found themselves closed and unsure of when they would be able to reopen again.
Some businesses were able to use PPP loans, insurance policies, and lawsuits to stay afloat in 2020 and it seems like many are using those same avenues moving into 2021. But what does this mean for the commercial real estate industry? Will we ever go back to “normal”.
Remote work will be a permanent fixture in the workplace. Many businesses have downsized, seeking centralized locations in major cities to house their regional offices. Even if people are coming in less frequently, the likelihood of them purchasing a space may be slim but the chances of them leasing an office space is much higher.
Short-term rental options are rising in popularity. Employees are able to temporarily rent spaces that allow them to plug into work and have some sort of privacy and separation from their home life. Co-working spaces also often have amenities like outdoor space, free coffee, free beer, telephone booths, conference rooms, and printing services that people are allowed to use for free or at a small fee.
The pandemic has created a new wave of subleasing. For businesses who own their own commercial real estate or are stuck in a contracted space too big for their needs, the option to sublease space out to other businesses is a great way to bring in revenue.
The pandemic is also changing the way leases are written. Many business owners are hesitant to sign new leases given the economic downfall of 2020; however, new contract clauses are being explored to protect clients and owners like flexible terms and allowing them to leave in case of a declared public health crisis.
For more information on how the pandemic affected the commercial real estate industry and what we can do to help, contact Lionheart Commercial Capital today.