The Vital Role of Agility in CRE Market Changes
Everyone has often seen Commercial real estate (CRE) as a slow moving industry . With transactions taking months to execute and minimal risk of assets losing their value overnight
Commercial Real Estate: Embracing Agility for Success
Everyone has often seen Commercial real estate (CRE) as a slow moving industry . With transactions taking months to execute and minimal risk of assets losing their value overnight . However, in today’s fast-paced world, agility has become more crucial than ever . In this article, we jump into the significance of agility in the CRE landscape while exploring market changes that highlighted its importance in 2020 and why it remains a key factor today . In addition to that we will showcase how Financial Lobby improves agility for commercial Lenders and helping them navigate the evolving market with ease .
Market Changes That Made Agility Vital in 2020
Oh 2020, the worst year of our lives . The COVID-19 pandemic disrupted every aspect of our livinghood, including the CRE sector . The impact of remote work becoming the norm, travel taking a hit, and people avoiding crowded spaces was significant . Just look at the national vacancy rates, they tell a sobering story . Retail vacancies skyrocketed to 20%, while office vacancies reached a whopping 17% by the fourth quarter . Hold on tight for this shocking stat: the hotel industry saw a mind-boggling 300% year-over-year decrease in occupancy . And guess what? There’s still a substantial amount of empty commercial space, thanks to many people working from home and retailers grappling with rising rent costs . It’s been a wild ride for the CRE industry, that’s for sure .
While this things are hapenning the real estate market couldn’t stay still . As the real estate market started shifting and changing at lightning speed, the commercial real estate (CRE) industry found itself struggling to keep up . The lack of technology really put a damper on their reaction times and practically brought the sector to a standstill . On the flip side, the residential real estate folks were quick to adapt and leverage technology to stay agile, meet demand, and adjust to market shifts . It’s high time that CRE professionals take a cue from their residential counterparts and embrace change as the new normal . It’s all about staying flexible and making the most of the available tools in this fast-paced world .
Why Agility Is Now More Important Than Ever
Although vaccination rates rise and life slowly returns to pre pandemic patterns, the CRE industry is not yet done transforming . Leasing demands are shifting and professionals in the field must adapt accordingly . Office spaces -in particular- are witnessing a change in demand as employers and employees recognize the viability of remote work which challenges the conventional notion of large office spaces for big companies .
It’s probably going to lead to many retailers to transition to online operations or repurpose their physical spaces as mini warehouses for delivery services rather than traditional shopping destinations . On the other hand, industrial spaces are experiencing increased demand due to the rise of last-mile distribution centers and logistics warehouses essential for e-commerce operations .
The hospitality industry is coming back as travel resumes but let’s not expect a uniform recovery across all areas . Some regions might experience a boost in demand for leisure travel, while others might need to get creative and repurpose their properties for alternative uses . And hey, here’s an interesting twist; data centers are gaining more significance! With remote work and cloud-based operations on the rise, the need for networking services and data storage is skyrocketing .
Here’s the thing for you all: to navigate these changes effectively, borrowers and lenders need to examine the technology and data . It’s just like having a nuclear weapon to stay agile and make smart investment choices and avoiding risky ones at the same time . However; here’s the kicker, the CRE industry has been a bit lingering to embrace technology . Thankfully, there’s now a solution that can give them a boost and enable greater agility .
Keep it in mind that agility is the key to success in today’s CRE market and the data actually proves it! FinTech lenders are processing mortgage applications at lightning speed and there’s a massive wave of commercial and multifamily lending expected in 2021 . It’s about time the CRE industry hops on the technology train . It’s all about staying one step ahead of the game which allows making smart decisions and fully embracing the power of agility . Ride this wave and make the most of what technology has to offer!
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