Commercial property owners are facing unique challenges these days. Concerns over sustainability and climate change coupled with massive supply chain issues and unprecedented labor shortages are troublesome. It’s one thing to experience one of these factors by itself, but a whole new ball game when experiencing everything at once.
Thankfully, with every crisis, there’s always a population of solution-focused innovators seeking real-time solutions. The commercial real estate industry is moving quickly to manage these issues. Before strategies are mapped out, however, a strong understanding of these challenges should be thoroughly examined.
Take a look at what commercial real estate owners are deeming their greatest challenges in 2022.
Inflation Causing an Economic Struggles for Commercial Real Estate
There’s no ignoring the obvious with regard to our current economic condition. How it relates to the commercial real estate industry is undoubtedly troublesome. Increased rates of inflation are resulting in higher interest rates, making it more expensive to borrow money. Borrowers are less likely to engage and invest when their money is getting swallowed up in interest rates.
These higher amounts impact everyone in the commercial real estate world. Property renters are looking for affordable rental prices for office spaces and other commercial venues. While property owners are having to raise prices to keep up with inflation, banks are pulling back on loans more than ever before, causing severe disruption in the commercial real estate process. It’s difficult to get warehouse lines right now, including securing syndicates to syndicate loans making banks hold back altogether.
Finding and Securing Reliable Tenants
As a domino effect to the earlier mentioned challenge, it only makes sense that finding tenants would be a problem. Finding suitable tenants takes considerable time for commercial property owners and managers even in strong economic times. However, finding the best match is increasingly difficult when there are massive amounts of the population experiencing job layoffs, relocation, and downsizing their investments.
More and more people are also opting for ways to conduct online business, using their home offices as their home base instead of expensive commercial rental space. As more populations migrate to other parts of the country, your commercial real estate may be at a disadvantage or advantage depending on which side of the scale you fall on. Either way, keeping up with these changes is necessary to overcome sunken investment costs.
Not Adapting to the Changes
The greatest challenge is self-induced: not adapting to these changes as quickly as possible. Commercial property owners cannot afford to waste time avoiding these issues. In order to survive and thrive despite the challenges of 2022, adjustments need to be made to strategize success. Depending on the type of commercial products and services on the market, being aware of trends such as increased online shopping, home gyms, etc. is important when making adjustments to your commercial strategy.
Start paying attention to the data that tracks your specific location. Since commercial real estate is largely affected by the city and state you live in, take a look at what the data shows to make the most comprehensive adjustment necessary. Technology is on your side when you know how to implement the results to address the challenges you face and revise your plan accordingly.
Plaza Companies is the Premier Choice of Commercial Real Estate
Plaza Companies is a full-service real estate firm specializing in leasing, management, construction, and development of some of the most innovative commercial real estate projects in Arizona. Our firm specializes in staying connected and conscientious of all emerging trends and laws.
Contact us today to learn more about leasing the right space or anything else we offer!