2020’s lease restructuring period isn’t anything like the industry’s used to. This year is filled with previously unforeseen obstacles, including pandemic disruptions, an economic downturn, and flood waves of new policies that implicate the commercial space.
If you’re struggling with these circumstances, don’t let the opportunity to restructure your lease idly pass you by. This gives tenants the chance to establish new leasing agreements that can potentially help them down the line. Reducing expenses, rewriting protocols, and other edits can be negotiated with your landlord. But, the window won’t last forever – so it’s time to start planning how you’re going to approach this process.
No matter what commercial real estate sector you’re working in, everyone might have a few questions about how to approach a lease restructure. Here’s are some helpful considerations to make:
Perform Due Diligence
Keeping up with the market is an imperative part of diving into lease restructuring. Especially right now, when CRE remains in a large cloud of uncertainty. Commercial tenants should do whatever they can to stay on top of their sector’s ebbs and flows. Explore comparable properties, talk to experienced professionals, and research your local area.
Don’t Wait Until the Last Minute
If you attempt to rush into a lease restructure, you could end up putting yourself in an even worse situation. A lease restructure is just as important as the original lease agreement. Whatever ultimately unfolds after the lease restructure will affect your bottom line of business for years to come, so it’s certainly nothing to take lightly.
Start preparing for your lease restructure in advance by researching the market and examining your tenant needs.
Consider Your Landlord’s Situation
It’s not just CRE’s tenants that are facing a tough external situation. Landlords have seen their fair share of challenges this year, too. Boost your negotiations by thinking like your landlord. Not only will this help you appeal to your property owner, but it can also create more realistic and well-rounded proposals.
Have a Plan
Never navigate a lease restructure blind.
Remember, lease restructuring doesn’t automatically work out in the tenant’s favor. Tenants who casually approach restructuring are opening the doors for potential issues, such as higher bills and less favorable agreements. Always have a general plan in place before you talk to your landlord. Know what you need, want, and can’t do. These safeguards can mitigate errors or wrong moves.
Work with a Professional
Consulting an experienced real estate agent or broker is a smart idea for any tenants who aren’t exactly sure how to navigate the details of their lease restructuring.
Tenants who decide to consult a commercial real estate professional will be backed by their knowledge, talent, and expertise in this market. Having a professional on your side also supports your negotiation skills, which is pivotal if you’re relatively new to the deal-making process.
Right now, it’s more important than ever for commercial tenants and their landlords to work together and collaborate on a restructured lease. Make sure you’re thinking about these important considerations when shaping your leasing strategy.
Contact one of our agents today to help with lease renewal negotiations 216 831 3310 http://www.naipvc.com
The coronavirus pandemic has undoubtedly shaken up every market in the country. While all eyes are on Class A cities to see how the very best in the game are faring during these times, other locations aren’t getting much consideration.
In the middle of all of this market-madness, how are opportunity zones doing right now?
Opportunity Zones 101
Opportunity zones are officially defined as “economically-distressed communities where new investments, under certain conditions, may be eligible for preferential tax treatment.” This system was introduced with the 2018 Tax Cuts and Jobs Act by the IRS.
Throughout the United States, there are more than 8,500 locations officially designated as opportunity zones. By outlining communities around the country that need the most aid, the IRS is able to stimulate the direction of development projects by offering significant tax benefits for investors who enhance these locations.
Opportunity Zones and CRE
In recent years, opportunity zones were thriving as commercial real estate professionals and investors funneled their interest into these communities.
Besides the inherent tax benefits, opportunity zones have proved themselves to be strong investment options. Competition is low, the returns are usually substantial, and it’s a strategic way to nationally expand commercial portfolios.
But, now that the conditions have changed, how are these locations doing? Here’s what the ‘right now’ of opportunity zones looks like:
Investors are Wary to Move Forward
In the midst of a pandemic and an economic downturn, investors are shying away from opportunity zone investments. As projects all around the country have been subject to the widespread disruptions relating to COVID, opportunity zone investments aren’t picking up speed the way they were in the past.
It’s clear that investors are wary about funneling their capital into any investment right now. In a time of long term uncertainty, it’s difficult to pivot strategically. It’s impossible to know where the virus’ next hotspot will be, or if there will be another country-wide market closure anytime soon.
Because of these outstanding circumstances, investors are giving all investments, including opportunity zones, a second thought before moving forward.
Stimulus, Benefits, and Incentives
Even while investors are skeptical about moving forward with an opportunity zone development projects, the momentum is being fueled by the announcement of new incentives for these deals.
The IRS is set to offer further tax relief for opportunity zone investments by nullifying some of the more stringent qualification factors that block many development projects from being able to claim the benefits of these specified areas of investment.
These current aid programs are making the benefits associated with opportunity zone investments more accessible, which is pivotal during these COVID-19 hardships.
The Future of Opportunity Zones
While commercial real estate’s opportunity zone arena has hit a stalemate during the pandemic, this area of investment isn’t set to fall out of favor. As soon as the pandemic’s climate settles down enough to have a clear outlook on the future, expect the investor interest to pick back up again.
But, for now, keep an eye on the progress of opportunity zones. When they start to expand again, you won’t want to miss out.
Commercial real estate’s industrial sphere has been a winner in the business for years now. Often called the ‘golden child’ of commercial real estate, industrial spaces seem to thrive even when everything else is facing challenges.
It’s becoming increasingly clear that warehousing is the way of the future. Riding on the back of e-commerce alone, the industrial space is set up for success. But, in preparation for the anticipated growth, warehouses are undergoing a contemporary makeover.
Here are the latest architectural design trends that are impacting the warehousing scene:
Increasing the Baseline Dimensions
As warehousing and last-mile logistics experience an upsurge in demand, warehouse design plans are pushing the boundaries of height and width. In order to maximize the capacity and efficiency of these spaces, architectural designers will be seeking to attain higher clearance heights while expanding the loading doc’s bay area.
Even small adjustments here can streamline the packing and unpacking processes that happen adjacent to the loading docs.
Sustainability has been a priority for the warehousing industry for some time now.
Expect to see this incorporated into the design development process in the form of energy-efficient building features. The facility’s orientation and physical structure will be set up to facilitate passive heating and cooling, expanded natural lighting, and sustain better ventilation.
Automation in the Warehouse
Smart technology will be making its way into the warehouse scene in the form of all things automation. On-site Smart integrations, such as automatic lighting, AI-powered atmospheric controls, and remote-controlled doors will be the norm for warehouses into the future.
In other parts of the world, multi-story warehouses are the norm.
CRE pros can expect to see this trend carry over into the U.S. in the near future. As the demand for last-mile logistics continues to grow, this space-maximizing strategy will help metro-rooted industrial sites thrive even with limited square footage.
Cold Storage Capacity
As the need for grocery delivery services expands post-COVID, this business requires a stronger web of warehouse infrastructure. Industrial designers are gearing up to explore the cold storage industry to facilitate easier and cheaper cross-country transportation of food and perishable items.
These projects will completely elevate the potentials for fitting groceries into e-commerce’s current model.
Expanding Parking Spaces
As more and more deliveries are happening at warehouses each day, parking is a prime concern.
Industrial buildings are expanding their parking capacity to accommodate simultaneous pick-ups and drop-offs without causing a traffic jam. These spaces need enough parking to support the on-site staff as well as industrial vehicles, so it’s likely that designers will choose to make two distinct parking areas for the different brackets of traffic.
Flexibility is Key for Growth
All in all, flexibility of design is being named as the top attribute for warehouse design.
The industrial spaces of tomorrow need to be able to quickly pivot, adopt the new trends as they roll out, and adjust their functions depending on the task at hand. The more a space is able to do, the better suited it will be to push forward into the next phase of warehouse design.
Keep your industrial portfolio current by paying attention to these up and coming warehouse design trends.
The self-storage sector has immense promise for commercial real estate.
These spaces are resilient, in high demand, and fit seamlessly into the needs of contemporary society. As people become more transient and hold off on purchasing a home, storage space becomes a necessity – and the proof is in the numbers. In 2019, the vacancy rate for self-storage was only 9.9% and was projected to only climb to 10.0% in 2020.
Evidently, self-storage units are attending to today’s pain points while pushing forward in the commercial scene. The expansion and success of domestic self-storage spaces have been attracting the attention of commercial real estate professionals and investors all over the globe.
Our eyes are on self-storage, and yours should be, too. Here’s what to look out for in the self-storage space right now:
Helping Homes Navigate COVID
As the coronavirus pandemic ushered in unanticipated changes to life as we know it, self-storage played a surprising role in supporting households and families during these turbulent times.
The economy shook, unemployment rates crept higher and higher, and people were fleeing from high-risk areas to stay with family members in less-affected regions. Not everyone lives in a mansion, and many households around the country needed to suddenly adjust to new rates of occupancy.
In order to make room for these last-minute move-ins, self-storage units were a savior for households struggling to make accommodations work. Unnecessary furniture, clutter, and non-essential items taking up too much space could be temporarily moved into self-storage units for the time being.
Impacts from WFH Trend
Market closures moved everything into the household. School, work, and everything in between are now operating from home-base… but how does that all fit in?
Flexibility and creativity were needed to turn those extra rooms in the house into personal offices or one-person classrooms. These disruptions won’t last forever, and self-storage provided the option of making a smooth transition between market closure and reopening. That extra furniture could be moved out of the house and moved back in – all without missing a beat.
Tech Integrations and Remote Organization
Although self-storage has been in a comfortable place, this industry hasn’t been idle. These spaces have been adopting a robust tech-powered infrastructure to facilitate a streamlined, modern, and digitally-driven operational flow.
This web of tech enabled the self-storage industry to quickly pivot according to the pandemic’s social-distancing protocols with remote integration. Self-storage provides a safe and contactless option for tenants looking to rent a space during the COVID-era and beyond.
Ready to Ride Out the Storm
The coronavirus proved that self-storage offers an indispensable value for communities.
In both good times and bad, self-storage spaces provide key value for local commercial real estate markets. These investments are resilient. Economic downturns make self-storage even more vital as people are forced to relocate. On the other hand, bustling economies take advantage of the extra space.
In every situation, self-storage supports people in times of change – whether it’s a planned move or a sudden disaster, self-storage spaces are a must. CRE professionals, keep an eye on self-storage. It’s an industry ripe for expansion and success.