Before COVID-19, it may have taken six months for a disturbance in the residential real estate market to affect commercial practitioners.
“Now, whatever’s impacting the residential industry is impacting us as well,” says Michica "Mish" Guillory, a Houston-based REALTOR® with nearly 20 years of commercial and residential real estate experience. “The evictions, the tenants bailing out of suites just like people abandoning their homes—COVID-19 has leveled everyone’s playing field.”
Guillory, who owns The Guillory Group School of Real Estate, says change has been the only constant in this new business environment. Commercial real estate practitioners should protect themselves against short-term volatility and, if possible, take advantage of excellent opportunities.
Should clients look for commercial space right now? That depends on the client, Guillory says.
“I don’t know if it is the time to open an ice cream shop right now ... people have to ask themselves, ‘Do I think my business can survive another shutdown?’ Is your business strong enough to weather another wave of COVID-19 if you personally guaranteed the loan?”
There are opportunities for those who know what they are doing and can safely expand or buy.
“Rental prices are much better than they used to be because landlords are fighting vacancy rates. The terms of some of the landlords’ loans require they keep a certain amount of occupancy,” she says.
Some commercial property owners may want to sell because they need the cash flow.
“Some people are saying, ‘Let me buy things up now because they’re cheap. We can fill them up later.’ It’s an amazing time for people to be buying or selling commercial property.”
Expand Your Skillset
Reinforce your real estate practice, Guillory says. Perhaps earn new certifications or find new income streams. Diversify your business so that you can continue to operate if your primary services slow down or disappear.
Ask for Lease Amendments
Guillory recommends tenants and landlords amend leases to:
- Require face masks for anyone entering a suite without a tenant’s permission
- Extend commercial leases by the amount of time the state government forced businesses to shut down
- Adjust rents to match the allowed capacity percentages of reopened businesses.
Landlords may not like or accept these terms, Guillory says, but they will likely weigh them against the risk of more vacancies.
Many agents think commercial real estate can be learned as you go, according to Guillory.
Guillory suggests hiring trained professionals, like analysts and accountants, to protect your assets. Now is not the time to experiment.
“Commercial real estate is not for the faint of heart at any time, let alone during this moment in our history,” she says.