The economy ebbs and flows.
The real estate market is particularly vulnerable to its changes. But there are a couple of things about a ‘bad” economy that we can be thankful for as real estate professionals.
Income and Appreciation
Property investors know that the value of their property is created as much by the income stream provided by their tenant as it is the value of the bricks and mortar and the land it sits on. This makes a leased building very attractive to a potential buyer looking to score a deal in a struggling market and hold onto it for the long term.
Availability and Lower Rental Rates
In a “bad” economy, there are generally more options available for tenants who are in the market to expand. As tenant representatives, this puts our clients in a powerful negotiating position. Most landlords will take a lower rental rate over long-standing vacant space any day of the week. During a downturn in the economy, a tenant may be
able to secure space at a reduced rate because the property owner has no competing offers and doesn’t foresee any in the near future.
So how do we make the most of a “bad” economy?
Realize there is no such thing. The economy and real estate markets change and develop in cycles. So, it stands to reason that we as real estate professionals must do the same. Attempting to operate in a hot market the same way you do when the market is cold just sets you up for struggle and frustration. Go with the flow. Learn how to identify and predict market changes and adjust your strategy accordingly.
Looking to move or expand your space? Contact Ryan Hartsell with questions or assistance to purchase or lease commercial real estate in and around the Houston, Texas area.