Author: David Armenta
Date: 4-30-2023
Bottom line up front is COVID changed the office location to telework from home. And. There's a way to convert the commercial property to fill opportunity gaps in the market.
Commercial real estate refers to properties that are used for business purposes, such as office buildings, retail spaces, warehouses, and industrial facilities. Investing in commercial real estate can be a lucrative opportunity for investors, and there are several reasons why now an opportunistic time may be to invest in commercial property.
First, interest rates are currently low, which can make it easier to finance commercial real estate investments. Low interest rates can also make commercial real estate a more attractive investment option compared to other asset classes, such as bonds or stocks, which may offer lower returns.
Second, the COVID-19 pandemic has led to changes in the commercial real estate market, creating opportunities for investors. For example, many companies have shifted to remote work, leading to increased demand for suburban office spaces, while urban office spaces may have lower demand. Similarly, the pandemic has accelerated the shift towards e-commerce, leading to increased demand for industrial and warehouse spaces.
Third, there may be opportunities to acquire distressed commercial real estate properties at a discount. For example, businesses that were impacted by the pandemic may have been forced to close their doors, leading to an increase in the number of distressed properties on the market.
Fourth, the tax benefits of investing in commercial real estate can be significant. For example, investors can take advantage of depreciation deductions, which can reduce their taxable income and provide a higher after-tax return on investment.
However, it is important to note that investing in commercial real estate also comes with risks. For example, the value of commercial real estate can be affected by economic conditions, changes in market demand, and other factors. Additionally, commercial real estate investments may require significant capital expenditures, such as property maintenance or renovations.
In conclusion, there are several factors that make now an opportunistic time to invest in commercial real estate, including low interest rates, changes in market demand due to the pandemic, and potential opportunities to acquire distressed properties. However, investors should carefully consider the risks and potential costs associated with commercial real estate investments before making any decisions.
