What to Expect Post-Pandemic:
Expect the Unexpected
Investors know that past performance is not an indicator of future outcomes, yet it is natural to see the echoes of events from the recent past and assume that current market trends will follow the same pattern.
In Recovery, or Not Yet Feeling the Stress?
The events of 2020 will continue to affect real estate markets for years. Given prolonged stay-at-home orders and an unprecedented number of businesses closing their doors for good, many investors expected to see a wave of defaults and a drop in commercial real estate prices by 2021. The price drop hasn’t materialized.
At this point, no one can say what the medium and long-term effects of the pandemic will be. Investors expecting to see a repeat of the 2008 financial crisis may have forgotten that the housing price bubble began to collapse in 2005. It took 2-3 years before things really hit rock bottom. Rather than try to time swings in the market, real estate investors like Steven Taylor Los Angeles focus on places where your investment can add value.
In every market, there are neighborhoods and properties that were previously neglected or under-utilized, but where an investment could potentially improve the value of both the property and the community. Finding those is key to success in commercial real estate investing.
Forget Expectations, What Can You Observe Now?
Steven Taylor LA, who focuses on apartment redevelopment, suggests redesigning multi-family structures to support work-life balance. Some of the lifestyle changes prompted by the pandemic, like increased remote work and online schooling, are going to carry into the long term. If your apartment redevelopment supports the lifestyle that your tenants want to live, your property will increase in value – both in terms of the rent tenants are willing to pay and in terms of resale value.
Rather than try and fit reality into your expectations, observe the current environment with as objective an eye as possible. You may find opportunities that were not predictable, as they did not exist before. For example, one type of commercial property which did experience a significant wave of vacancies is gas stations. Many locations closed where there was a sustained drop in commuter traffic, but recently both buyer demand and prices for gas station listings are on the rise.
Will real estate prices drop as a result of the pandemic of 2020-2021? Of course, everyone would like to know. However, investors who focus on bringing value into their investments need not worry about predicting the market. Do what you know will create value and keep using your discernment.