We have now eaten up the six months of 2021.
At Costco, Christmas decorations are adorned with red, white and blue sheet cakes! But I deviate.
Anyway, I thought it would be fun to look back on what this year brought about and what we saw in the 2021 balance. It’s a good idea to get rid of the cluttered consciousness on a regular basis, so thank you.
A year ago, we received some great news about the deals we were trading. At the end of the due diligence period, buyers abandoned the contingency and closed escrow on July 17, 2020. boom! Why do I mention this? As you can see, this offering originally started in February 2020. It’s a great timing.
We immediately received an acceptable proposal and contracted the property just in time for the country to press the pause button. As you can imagine, trading surged and resumed in June 2020, waiting for marketing.
Our new chronology proved to be foresighted as the buying activity returned with revenge. Frankly, the rise in industrial demand has not stopped. If anything, it’s more bubbling than it was a year ago. but why? Manufacturing and logistics concerns were considered essential. Replacement parts were needed for things related to homes and cars.
And because people were stuck at home, they stared at their computer screens and spent hours ordering goods. All of these factors have led to explosive growth in commerce for companies that make and ship goods.
What is taking so long? I had a nice conversation yesterday with the moving and storage company I network with. He had just visited an Inland Empire technology company that was undergoing a transition. Apparently, it was decided to work primarily remotely, so there is no need for a bank of former huge office suites. They try to find a surrogate to replace their leasehold. This is a classic example of the decisions made by office residents throughout the rest of 2021.
With a clearer path forward (until the next speed bump), people are starting to return to the office — or not. Get a more accurate picture of the exact amount you need to operate a square foot. However, the market upheaval brought about by the blockade has introduced some uncertainties. A decision gridlock occurs. Long-term contracts such as multi-year lease renewals will be postponed.
Wayne Gretzky famously commented, “I skate in a place, not where the puck was.” It’s a popular quote because everyone vividly depicts what they want to do, but they don’t know what to do. You may be wondering what this has to do with commercial real estate? That’s it: It’s almost impossible to predict where the rent and selling prices will be in the coming months! Especially if inventory is planned or under construction.
Sure, the price will be higher, but how much will it be? The heavy burden rests on commercial real estate practitioners who must provide appropriate guidance to their clients. After all, I don’t want to leave the shekel on the sideboard. However, vacancies are expensive.
So if you push-it can cause delayed occupancy-is it worth the cost? During this time, I usually recommend pricing to be decided, but unfortunately this is a bit of a crackdown. Residents like to negotiate established questions and “tell me what it’s worth”.
Let’s do this again in January next year-predictive rather than pandemic-and see how accurate we were.
SIOR’s Allen C. Buchanan is a principal of Orange Lee & Associates Commercial Real Estate Services. He can be contacted at email@example.com or 714.564.7104.
With 2020’s crazy real estate year in mind, what does the rest of 2021 bring? – Press Telegram Source link With 2020’s crazy real estate year in mind, what does the rest of 2021 bring? – Press Telegram