Why The Supply of Commercial Real Estate Is Slowing, And What You Should Do About It
With the exceptions of slight growth in specific market sectors like senior and student housing, and single-tenant industrial leases like regional distribution centers, projections for the future show modest additions to supply in the world of commercial real estate. So what does this mean for your business? If you’re looking to move, will you be forced to sign an overly expensive lease to get the right place for you, or will you need to give up on the dream location just to save some money? The answer is neither, but only if you’re smart about the process.
But first, why aren’t we seeing booming growth in commercial real estate? As of right now, banks are still skeptical of funding new construction, especially in the hospitality industry, and are waiting to see if the economy will continue to recover in a stable fashion. While insurance companies and private debt funds are beginning to fill the void left by the banks, the future development of commercial real estate spaces is mostly uncertain.
What this means for you and your business is a couple of things; first, use this knowledge to strengthen your own leverage. Work with your team to devise a strategy which will prevent landlords taking advantage of the market’s current circumstances. In addition, this means it’s the perfect time to invest in commercial real estate! If the demand for office space is high, but the supply is low, who do you think makes money in this situation? Now is the perfect time to stop waiting for someone else to deliver an opportunity, and cut yourself the slice of pie you’ve always wanted.