Although it may seem like the worst of the COVID-19 pandemic is behind us in the US, commercial real estate continues to feel the lingering effects. The pandemic has changed how people view and use their spaces, and the commercial real estate industry is pivoting on its head to find a new normal.
If you are a lender who handles commercial real estate, you are likely keeping a close eye on your properties along with the industry as a whole. At Total Lender Solutions, we work closely in foreclosure, having helped hundreds of lenders understand the changing landscape from our perspective as foreclosure experts.
Below are a few lingering impacts that the pandemic has had on commercial real estate:
The Lingering Impact of COVID-19 on Commercial Real Estate
All commercial real estate, including office buildings, hotels and hospitality, multifamily units, and retail faced changes during the COVID-19 pandemic which are still affecting the market now. “The time ahead is unprecedented,” says Total Lender Solutions CEO Randy Newman. “There’s no way to predict what the commercial real estate market will look like, but preparedness is the best way to stay ahead of the curve.”
Office Spaces and Remote Work
Remote work was already increasing in popularity at the start of the pandemic, and stay-at-home orders accelerated this trend. Remote work was adopted on a global scale, leading to increased vacancies in office buildings. Many office buildings were forced to either downsize or repurpose their space.
In the following years, many commercial office spaces are still not up to the capacity they were in 2019, and some experts predict that they will have difficulty ever reaching that level of occupation soon.
Hotels and Hospitality
While office buildings struggle to reach occupancy, many hotels and restaurants are beginning to see numbers similar to those in 2019. According to the industry forecast made by the American Hotel and Lodging Association, “the average hotel occupancy is expected to reach 63.8% in 2023 – just shy of 2019’s 65.9%.”
Hotels are seeing higher trends in business travelers wanting their hotel space to have all the accommodations for both business and leisure travelers. Many property owners of hotels and boutiques are rethinking their spaces to provide guests with the right amenities for their ideal guest experience.
Retail
The popularity of online shopping reaches new heights daily, and many retail properties are looking for ways to integrate digital tools into their brick-and-mortar shopping experiences. Companies like Amazon remain front and center on people’s minds as they innovate new ways to incorporate tools in retail stores, such as Whole Foods. Nike is another example of a retail store taking advantage of digital tools, having recently launched augmented reality features in some of their flagship stores.
Even with new advances, inflating prices have reduced consumer spending, and the rise of e-commerce has significantly affected the retail sector. The recovery of these sectors may be slow, and the excess supply of commercial properties could lead to extended periods of vacancy.
Multifamily Units
Tenants’ priorities have shifted as a result of the pandemic. Health and safety considerations have become paramount, leading to increased demand for better, touchless technologies and enhanced cleaning protocols. Tenants are also seeking flexible lease terms and spaces that allow for adaptability in case of future disruptions.
Since more tenants continue to work from home or hybrid, tenants expect more flexibility from their living spaces. Many property owners are seeking modifications to impact the overall valuation and attractiveness of multifamily residential buildings, including hybrid retail and living spaces.
Resources for Lenders Needing to Complete a Commercial Foreclosure
The changing landscape, the residual effects of the COVID-19 pandemic, and inflated prices all predict a rise in commercial foreclosures. The professional team at Total Lender Solutions has helped lenders handle commercial foreclosures for decades, even through some of the most unique economic situations in America’s recent history.
When you outsource foreclosures to experienced professionals, you can ensure that the process is completed promptly and in accordance with state and federal compliance laws.
Total Lender Solutions has 15 years of experience helping lenders complete complex legal processes. We act as a dedicated extension of your team, offering comprehensive solutions and seamless communication throughout the foreclosure process.
