The past year has been packed with extraordinary events, and most not in a positive respect. If you own or manage a business, it’s been tough. And the impact of COVID-19 on the commercial real estate market continues into the coming year. Whether you own commercial property, are a current renter, or have a change in your needs, here is how the ongoing commercial real estate trends could impact you in the coming year.
Commercial Real Estate Loan Modifications
As the U.S. economy began shutting down in early 2020 and then worked towards a slow recovery, many businesses have continued to struggle. The situation found commercial property owners in a situation where they had to negotiate with both their tenants and lenders to stay afloat.
Property owners often had to continue servicing debt, which they rely on rent to pay. When small businesses can’t make lease payments, this has led to an increase in loan modifications, which is a trend we’ll likely see continue into 2021.
Commercial Lease Modifications
Following along the same narrative, the economic downturn in 2020 has forced many small and large businesses alike to either scale down operations or close their doors temporarily. This has lead to landlords being more agreeable to lease modifications such as short-term rent deferrals.
There is a longer-term issue at play as well. Some businesses have embraced a work-from-home model to keep employees safe from the pandemic. As commercial leases expire, it’s possible that many businesses will either not renew or choose to adjust their needs.
On the other hand, some businesses could increase their needs in the coming year. Why? Instead of having an open office and shared space, some businesses are opting for an increase in private offices and enough space to allow for safe social distancing.
Creating a Safe Work Environment
One of the biggest commercial real estate trends over the past year is the growing need to provide a safe work environment for both staff and clients. Not only should tenants feel safe and comfortable in their space daily, but so should any customers.
Many property owners have put COVID-19 policies in place for commercial space, such as distance direction markers and temperature checks. Property owners will generally need to continue to offer these options to retain tenants and appeal to new tenants.
In 2021, some of the commercial real estate trends you might see include the use of technology to create additional safety measures. These include adding pre-entry temperature checks for people, touchless entry into spaces instead of keypads, and upgraded cleaning using UV lights and air filtration systems.
The COVID-19 pandemic has put business owners and commercial property owners in an unprecedented situation. If you’re still trying to navigate this landscape, we can help. Caldwell Commercial serves clients throughout the Charleston, SC area. We have over 80 years of combined experience in commercial real estate. Contact us today to learn more about our services.
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