WASHINGTON (Nov. 19, 2020) – Commercial property values have changed over the past six months due to the pandemic, and property is currently in uncharted territory. This is what the president of the commercial real estate agent NAI Pleasant Valley, Alec Pacella, said, speaking at the REALTORS® Conference & Expo 2020 on Wednesday.
Pacella, who hosted a session titled "CRE Real Estate Selling: How COVID-19 Is Affecting the Numbers," summarized the recent history of the commercial real estate industry, including its price index, value spikes and buyer expectations.
"We have had a great run in the last six or seven years," said Pacella of commercial real estate investing.
"At the beginning of the last decade – 2006, 2007, 2008 – expectations were actually higher than the price index. There was more demand than supply."
In 2009 and 2010, Pacella notes, expectations were lower than the price index. As a result, there was almost no investment in commercial real estate.
"There were no stores back then," he said. "In many markets you couldn't give away real estate because expectations were so low."
The scenario Pacella describes is not dissimilar to the current state of commercial real estate, as many landlords of once-profitable businesses have watched popular chains struggle or have been forced to shut their doors permanently.
According to Pacella, the key to navigating this market is keeping property owners and investors engaged. And because of the cyclical nature of the market, Pacella says, investors will want to be able to capitalize on when conditions eventually improve.
"In an uncertain market it is important to keep the talks going." A frank conversation strategy could ultimately lead to a deal in the future.
In the commercial real estate sector, Pacella says transactions can take place when markets rise or fall.
"We could sit there and sit on our hands and say, 'We have no business; talk to me in 2021, 2022 when things come back.' No, that's not what we do like that most of us are not wired. "
The National Association of Realtors® is America's largest trade association and represents more than 1.4 million members who work in all areas of the residential and commercial real estate industries.
# # #