2020 was a challenging year for various commercial real estate submarkets. At 2021 kicks off, projections show that over $125 billion in commercial real estate will be sold off at distressed rates. Banks and similar lenders have all but locked their doors to property investors, leaving openings for new investors to fill the void and boost the economy.

Mortgage Delinquencies

Mortgage delinquencies have surged since the pandemic started. Motels, hotels, storefronts, restaurants, and even multifamily dwellings have been hit hard as tenants were unable to make rent, or because operations shuttered completely with no sign of new business. Not only are banks being forced to sell these properties at very low rates, but they have simultaneously withdrawn from approving financing for new property acquisitions. At the same time, forward-thinking property investors and business owners see the light at the end of the tunnel, and demand is growing to purchase and lease commercial real estate.

Adapt and Reuse

New property investors bring capital and innovation to the table. The commercial real estate market is seeing property investors try new ideas to generate revenue from some unlikely places. Store fronts and industrial properties are being converted to labs and clinics. Multifamily residences are being renovated to allow for safer foot traffic. Some property investors are even making apartments bigger to reduce the number of tenants while increasing the amount of rent asked per unit. Offices and restaurants are being turned into pop-up galleries with more controlled traffic from occupants and visitors. Ambition and innovation are going to drive market recovery this year.

The Urban Exodus is Real

With borrowers defaulting on loans, a number of properties in the suburbs will be sold at distressed rates, as well. This will give property flippers a number of opportunities to flex their skills as people look for new houses outside of major metropolitan areas. Throughout this year, those entering the fix and flip arena are poised to generate income from renovated properties.

To get the financing you need to acquire, renovate, or build investment properties, contact the experts at The Capital Rams.