ant ICI pation BY MELANIE ROBITAILLE
SR. STAFF WRITER & GRAPHIC DESIGNER
Commercial real estate has always been known for its long game with lucrative gains. Then came stay-at-home orders, interest rate hikes, and the loss of lenders but many in the business know and insist it’s still a sure bet.
In hindsight, it’s easy to see why many industry watchers questioned the future of commercial, a niche that Franchisee, Kris Klair of EXIT Realty Consultants in California has always dealt in. After the U.S. suffered “one of the swiftest economic declines in history” according to a 2021 REALTOR® Magazine article, retail and commercial office space took a huge hit as caution increased around leasing. But Kris, and like-minded investors saw opportunity. “[People] are seeing that the commercial business is here to stay whether there’s a pandemic or not. The smart ones took advantage of the temporary downturn,” he explained. “We’re seeing more of the lending side of the commercial real estate vacate due to high interest rates, however overall, we’re seeing a demand in commercial needs. We’re seeing more people taking up office space and retail space lately, and I think that’s due to people getting back to work after the pandemic and getting tired of hiding behind a digital screen. There’s nothing better than shaking hands and making business happen.” EXIT Realty Upper Midwest Regional Owner, Bill Pankonin sees a different outlook in his Minnesota marketplace saying, “Currently higher interest rates along with lending institutions tightening their standards have required investors to sharpen their pencils and sellers to reconsider pricing options… The demand for office space in many areas waned dramatically and has continued. Many large office buildings are now being retrofitted into apartments, condos, and other uses. Food and hospitality were also hit hard. The hotel industry has since rebounded but the restaurant industry is still wavering. Investors continue to look for value and they have to consider many factors with the ongoing interest rate environment.” Commercial is only a part of the greater ICI, or Industrial, Commercial, Investment real estate sector. So, while some areas remain in a state of rebounding and reconfiguration, savvy professionals set their sights on the industrial and investment portions, because well, owning any real estate is considered a safe hedge against inflation. In fact, investors were blamed for “contributing to the inventory shortage in 31 of the top 50 U.S. markets” according to another Markets Most Affected by Investors REALTOR® Magazine article.
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