CRE outlook stronger despite supply chain challenges

Since April 2020, the National Association of Industrial and Office Properties (NAIOP) has been keeping track of the pandemic’s impact on CRE with their regular COVID Impact surveys. NAIOP’s June 2021 survey collected data from 239 US-based members, including brokers, building managers and owners, and real estate developers. A recurring theme in this latest survey was the increasing challenges commercial real estate (CRE) is navigating associated with supply chain disruptions and materials costs.

Supply and delay
With more than 86% of developers reporting delays or materials shortages, it seems the impact of COVID on supply chains is set to become one of the longest-lasting effects of the pandemic. Adding to difficulties, 66% of those surveyed reported delays in permitting and entitlements, a figure that hasn’t changed since June 2020.

Fixtures and equipment for stores are also in short supply, with order backlogs stretching into months for some retail sectors. While this isn’t necessarily surprising, given setbacks in manufacturing in key suppliers such as China, the CRE market shows promising signs of being on-track for continued recovery nonetheless.

Development despite setbacks
Despite the issues highlighted in the report, the survey still showed an increase in retail prospects. New acquisition of existing retail buildings was indicated by 39.1% of respondents, while 31.3% mentioned new development going ahead. Both of these figures represent a strong improvement from a previous survey in January. Deal activity was also noted to be on the up, with figures doubling for office and retail properties over the course of a year, and industrial deal activity increasing over 20% since June 2020.

“Bricks and clicks”
International industry players have also noted that, though larger spaces are still facing delayed rental uptake, 20,000-30,000 square-foot sites are garnering increasing interest. The potential for these spaces is as part of a multichannel retail/warehouse approach – the “bricks and clicks” strategy. As the demand for online retail increases, logistic assets, and storage spaces become more valuable, contributing to an overall uptick in both virtual and brick-and-mortar marketplaces. 

A promising prognosis
Even with the supply chain challenges facing the industry, the Federal Reserve agrees with the trend data gathered from NAIOP participants. In their June 2021 Beige Book, the Fed noted upward movement in industrial output and consumer demand. Though economic gains were noted to be slow, the outlook remains steady and positive.

President and CEO of NAIOP, Thomas J. Bisacquino, puts it like this: “The materials and supply chain issues are lagging effects of the pandemic, and they are affecting every industry. While the pandemic’s impact was deep, there’s a sense of optimism among NAIOP members, with deal activity rising and an increase in people returning to offices, restaurants and retailers.”


6 Must-Read Books on Real Estate Investing

Investors, need to restock your CRE library? Whether you’re looking to get expert advice, learn something from the pros, or pick up a few new strategies; investors can’t go wrong with a great read.

Here’s a list of the 6 best books on real estate investing:

1. Mastering the Art of Commercial Real Estate: How to Successfully Build Wealth and Grow Passive Income from Your Rental Properties
by Doug Marshall

In his popular book, Doug Marshall masterfully outlines the commercial investment process.

Marshall shows readers the ropes and even shares his six best tips on maintaining profitable assets. Reading this book will give you insight into when it’s best to move forward with a deal – and also when it’s a good idea to pass.

We love this book because it’s direct, straightforward, and incredibly insightful.

2. More than Cashflow: The Risks and Rewards of Profitable Real Estate Investing by Julie Broad

Don’t think that investment is all fun and games – it’s an industry that comes with its fair share of risks.

Julie Broad is reminding us all of the honest realities of commercial real estate investment and what it means to make it your full-time gig. Both novice and professional investors alike can gain a lot from Broad’s shared stories and advice.

We love how accessible and easy to digest the information is.

3. Long-Distance Real Estate Investing by David Greene

Remote investing poses a large challenge for commercial investors.

Dealing with assets in another state or country is a completely different ball game – but its ability to expand your portfolio makes can make it worth it. Greene is giving readers strategies and tips to navigate through long-distance deals and also pave the way for long term success.

We love how this book addresses a common pain point felt by commercial investors across the board.

4. Real Estate Investing Gone Bad by Phil Pustejovsky

If you’re wondering what not to do during an investment deal, check out Doug Marshall’s book. Real Estate Investing Gone Bad covers 21 true stories about when commercial property deals took a turn for the worst. By learning from others’ mistakes, readers can avoid potential troubles and losses.

We love this book because it portrays real-life examples of the dark side of property investing.

5. The Millionaire Real Estate Investor by Gary Keller

Investors who are looking to maximize profits and establish high returns on your commercial investments will appreciate Gary Keller’s book.

Keller spent years compiling the stories of hundreds of property investors, and the results lie in The Millionaire Real Estate Investor. It’s a must-read for anyone looking for a crash-course on commercial investments.

We love this book for its authenticity and pro-tips to optimize every transaction.

6. The ABCs of Real Estate Investing by Ken Mcelroy

Ken Mcelroy is taking all new investors under his wing in his popular book.

The ABCs provides a basic outline of what you can expect out of real estate investments and how you can set yourself up for success. Readers will get deal-boosting advice that helps to build a strong and stable portfolio.

We love how understandable yet sophisticated this read is.

Happy reading! Which real estate books are on your list?