Commercial real estate and commercial properties for rent are some of the most versatile markets out there and, despite COVID-19, they have remained a growing industry. In regards to renting commercial properties, it was a more challenging time in the early days of the pandemic. People who were renting had trouble making their payments at times, and with all of the uncertainty, no one was setting out to rent anything during that time. Now that the country is bouncing back, things are opening up again, and the vaccine rollout has been successful, analysts and professionals are able to somewhat reflect on what the impact of COVID-19 has been on commercial properties for rent.
Types of Commercial Properties for Rent
Commercial properties for rent are a powerful tool for developing the landscape around them. What buildings they are, how they look, who owns the property, and who rents the property all have ripple effects on their location. The building itself is an important consideration. Have you ever traveled and noticed how different structures look everywhere you go? Shopping in New York City and shopping in Miami, Florida are two completely different visual experiences, and they attract different people. High rises and tightly packed spaces contrast with brightly colored, stucco buildings and an open air space.
What’s in these properties can also affect what other commercial properties come around. If Prada is the first store renting in a storefront complex, other designers will likely follow, and suddenly that area is for upscale shoppers. If T.J. Maxx is the first store, other bargain stores will likely follow, and suddenly that area is for affordable shopping. In contrast, if neither of these stores rent the space, and instead a restaurant enters the space, the area might become a hub for delicious eats. Commercial properties for rent and their renters have a huge effect on the space they enter, and this phenomenon is responsible for the impact COVID-19 had on some spaces compared to others.
There are core and non-core commercial properties for rent. Core properties are places like apartment buildings, retail, office buildings, malls and shopping centers. Non-core properties are medical buildings, resorts (hospitality), and self storage facilities. Core properties are generally viewed as a more safe and stable investment, however, COVID-19 had unforeseen effects on both types of commercial properties.
Commercial Properties Affected
The impact of COVID-19 on commercial properties for rent affected many businesses across the board in a way that history never could have predicted. Both core and non-core commercial properties for rent, as previously mentioned, were affected. Due to the social distancing and stay at home orders, hospitality and retail took large hits. Brick and mortar retail stores were hit particularly hard. These renters went from decently successful businesses with patrons everyday, to ghost towns with no income, practically overnight.
Another group of renters that were affected by COVID-19 were those renting office spaces. Businesses were forced to conduct their everyday affairs online. Office commercial properties have been facing challenges of their own. Under lockdowns, most businesses are less productive—there’s less output, and this affects businesses’ ability to pay rent.
Companies who rent out spaces are ones that have been getting COVID relief from the government through the CARES Act. States have also been issuing unemployment benefits to people struggling, especially these small businesses struggling as well. Both of these types of benefits will go towards rent payments.
Overall Impact of COVID-19
The overall impact of COVID-19 on commercial properties for rent will largely depend on how long restrictions will last. Many states are making efforts to return to normal and there are some that are still locked down. The bounce back will be slow no matter what, but especially for areas that are still locked down.
COVID-19 has already accelerated brick and mortar stores toward the necessity of having online shopping options and an online presence. This will likely free up some renters’ space in the retail world in the future, but maybe not as much as we think. Office spaces, however, at least with the latest developments, are unlikely to be too affected. Businesses who needed relief to pay for their rent were compensated for the most part. If some areas remain as locked down even longer, then perhaps offices would disperse more too.
However, experts say that for rent on commercial properties, such as offices, there will be no permanent move away from in-person office spaces. Face-to-face value is something all of the technology in the world could never replace. The only professionals who could feasibly phase out of rented office space and into the virtual world are ones with individual practices, such as lawyers and accountants.
Only about 40% of society can actually, feasibly, work from home long-term, so commercial properties for rent will prevail. While there was a period of struggle for a time in the early days of COVID, there’s a light at the end of the tunnel. Retail and hospitality sectors can and will recover as the world continues to open up. If people have the mentality that it is safe to go out and continue the same way again, these renters will see a steady income again soon.
These changes, along with vaccines being rolled out, are moving things in a positive direction. The American economy turns over pretty quickly, and the prices of commercial properties for rent won’t change much. Current renters will become stabilized and people will begin renting again.
Looking for Commercial Properties for Rent?
Contact us for help finding the perfect office or retail space for lease or purchase! Schwarz Properties specializes in commercial and residential property management in Virginia, South Carolina, and North Carolina. Our portfolio includes retail space, restaurant space, residential, office space, and many more. Contact Schwarz Properties at 336-895-1336 or visit our website today!