December 29, 2020 – By Chris Sands: Despite the challenges we’ve seen this year, 2020 has been very inspiring and eye opening in terms of demonstrating the stability of commercial real estate through shifting times. Generally, we are privy to understanding the market within a 10-year timeframe that includes adapting to market corrections—however, with the last global pandemic taking place nearly 100 years ago and an industry shift that wasn’t brought on by a market correction, it was a greater challenge than ever to anticipate and predict the outcome for investors.
Pre-2020, prices were strong and cap rates were low in the investor market. Buyers were looking to take calculated risks with their investments with their strong buying power. When COVID-19 paused the commercial real estate market, we saw three tiers of buyers emerge: those who took a complete pause, those who fully forged ahead with high-risk investments and those in the majority who took calculated risks on concepts expected to remain stable during the pandemic and beyond.
This time has helped identify and highlight product types that continue to thrive in a shifting market and are based on essential concepts and businesses suited to daily needs, including industrial, medical office, fast food, grocery, gas stations, day cares and automotive locations. We’ve seen a resurgence of investor confidence in these businesses that we expect to continue into 2021.
Many triple net investments are also lending themselves to the need we’re seeing for human interaction: as multi tenant offices, casual dining restaurants and brick-and mortar retail spaces reopen, we’re reminded that although their look and function may change in 2021, they’re used to creating essential culture and synergy between individuals, and product types that lean into people’s desire to connect will continue to thrive in the long term.
While we’re still facing the unknown into the new year with the developments of the pandemic and a new presidential administration, the new year brings a resurgence of inventory in the market. Investors continue to seek out long-term investments with high yield and are taking advantage of attractive lending instruments in a safe and strategic way.
Going into the new year, the fundamentals of real estate still ring true: good locations, good tenants and continued review and enhancement of an investor’s full portfolio. Now more than ever it’s critical to look at your full portfolio in order to identify key opportunities based on market outcomes. By keeping a smart and strategic mindset that aligns with their core principles, investors will have the ability to continually adjust to the changing market and maximize their return in the long term.
Chris Sands is the Founder and CEO of Sands Investment Group (SIG). SIG is a commercial real estate brokerage firm that specializes in the buying and selling of investment properties for private investors, developers, tenants, and institutions across the United States. Our industry knowledge, experience and vast network of buyers and investors are integral in our client-forward strategies. It’s also one of the fastest growing and most successful commercial real estate brokerage companies in the country, with advisors that are among the most distinguished and sought after in the industry.
This post was originally published in: National Real Estate Investor (NREI)
Sands Investment Group (SIG) is a commercial real estate brokerage firm that specializes in the buying and selling of net lease properties for private investors and institutions across the United States. Our industry knowledge, experience and vast network of buyers and investors are integral in our client-forward strategies.