The commercial real estate sector has been uneven for most of 2020. New construction in the residential market is on an upward trajectory. Office space and similar properties are uncertain as new waves of COVID-19 hit major metropolitan areas. Banks are preparing for major losses, but property investors are proving to be adaptable, and are positioned for a big comeback in 2021.
Banks are moving away from investment properties
Banks are facing big losses heading into 2021. The uneven response to the pandemic led to property owners defaulting on loans for office buildings, food and entertainment venues, retail space, and more. The impetus for this started from the bottom on up. People were staying home and not putting money into local economies, so businesses could not sustain themselves with their pre-pandemic models. Without foot traffic, property owners were not generating the revenue they were used to, and ended up defaulting on loans. Because of this, banks and similar lenders are anticipating heavy losses on traditional property loans, and are not approving loan requests for commercial properties.
Property investors see opportunities
Just because banks are taking losses and tightening their requirements for loans does not mean property investors are out of the game. In fact, the commercial real estate market is wide open to property investors as we head into the new year. The shifts in the commercial real estate market have already begun, so investors can see the trends taking place. People want to purchase or rent single family residences instead of multifamily dwellings. Populations are migrating from big cities to the suburbs and even rural areas. Industrial properties are in demand as the economy prepares for a comeback. Office and retail spaces are being repurposed. Food and entertainment venues can still thrive as new guidelines are put into place. As a whole, the commercial real estate market has opened a number of opportunities for property investors.
Financing you next investment property
At The Capital Rams, we understand the challenges facing property investors when it comes to securing adequate financing for their transactions. We offer a wide range of commercial real estate funding solutions that are more flexible and accessible than traditional loans. Contact our offices today to learn more.