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How Commercial Real Estate Struggles with Covid-19

by | Jul 20, 2020 | Real Estate Investing

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The coronavirus pandemic has had a crippling effect on commercial real estate.

While the apartment and industrial markets have remained resilient…

The Pueblo market for office and retail has been struggling for years.

Now, it’s even worse.

Restaurants, hotels, retailers, and offices are having a very difficult time.

Prior to the pandemic there was higher vacancy for office and retail space.

The market has simply lacked the demand to fill the available space.

You can see the vacancy by driving past on busy retail streets like Santa Fe Avenue, Northern Avenue, Pueblo Boulevard, and E 4th Street…

The PBR building, located along the Historic Riverwalk which draws thousands of visitors per year, has a vacancy on the ground floor that has sat for years… even though the space would make for a great restaurant or retail location.

The shutdowns are making it very difficult for businesses to cope.

However, we have not yet seen any distressed or extremely motivated commercial sales.

I recently had a conversation with another commercial broker that specializes in the hotel market.

He told me the hotel sales market has grinded to a halt.

Hotel vacancy rates are at an all time high and owner’s are experiencing the decline in revenue.

But they are holding off from taking lowball offers, even though there are plenty of hungry investors ready to pounce on a steep discount.

The biggest factor keeping commercial real estate and businesses from selling at a discount is the Government’s PPP and stimulus money.

Large and small businesses have received billions in low and no interest funding.

The stimulus will keep the doors open and the lights on for now, but if the shutdowns continue I foresee a very big decline in commercial real estate values.

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