COVID-19 BUSINESS RESOURCES (SPONSORED)
While we’ve all been anticipating what the “new normal” might look like post COVID-19, many commercial real estate investors in West Michigan are optimistic about opportunities ahead. In the short-term, the focus will be on assisting existing tenants; however, wise investors can look forward to new real estate opportunities in a market that remains well positioned for long-term success.
“The fundamentals that drive good opportunities and successful real estate investments are still there,” noted Matt Abraham, Sr. Real Estate Advisor, First Companies. “West Michigan is fairly diverse compared with other markets. Pricing is reasonable and affordable here, and interest rates remain low. All of these factors position us well coming out of this unprecedented time.”
First Companies has served clients in West Michigan for over 50 years, offering a full range of real estate, construction and property management services – all under one roof. Jerry Baker, the company’s founder, began the business selling real estate and creating investment opportunities. The company’s strategies have allowed them to successfully weather recessions and other economic downturns by sticking to the basics when it comes to property and land investments.
For real estate investors – which include companies looking at space options for their businesses – the following are a few things to consider…
- Outline your goals. Look at your short- and long-term goals and exit strategy. If you’re a business that is out of room to operate efficiently, you may be able to stay in your current location by reconfiguring the space or adding on. If you determine you need to move, and expect continued growth, it could be advantageous to acquire space larger than what you need and lease out the additional square feet until you grow into it.
- Complete a build/buy/lease analysis. Construction companies want to build, remodel or renovate. Real estate companies want to buy, sell and lease available inventory. Businesses should check out all their options to determine what is in their best interest now and in the future.
- Select the right company. Do your homework when selecting a real estate company. Seek referrals and check credentials. In this market, look for a track record of creative problem-solving and strong relationships with local lenders. Too many investors believe they make money when they sell an asset, but if you work with the right company, and select the right property, you’ll actually make money when you purchase the asset.
- Have patience. Wait for the right opportunity and don’t let your money “burn a hole in your pocket.” Go into the investment for the long haul and ensure the property meets your criteria before buying.
- Spread the risk. West Michigan offers diversification. Instead of investing all your money into a single building with a single tenant, consider multiple properties with multiple tenants… and perhaps in different vertical markets/industries.
- Start with good equity. Having equity gives you flexibility and leverage when making decisions about the property and your tenants. You need the ability to restructure leases and retain good tenants through the tough times.
What can we expect in 2020?
The most challenging period will likely be getting through phase one of recovery – understanding and working through government mandates and recommendations as we reopen businesses and balance those activities with staying safe. In the next few months, our real estate staff and clients will be looking at the best ways to provide relief, where needed, to retain good tenants and keep businesses open.
“We have a number of tenants asking for help and we’re working to assess how we can best assist them. We’re skilled problem-solvers and understand the value of working with clients for the long-haul. This may mean providing creative options for rent payments in the short-term and extending the length of leases on the backend. For businesses nearing the end of their lease, there are opportunities to re-assess, re-evaluate and renegotiate with landlords,” commented Ty Hallock, Vice President of Real Estate and Business Development, First Companies.=
First Companies facilitates a number of property investment groups which gives the real estate team unique market insights, an owner’s perspective, and flexibility in times like this.
“Flexibility is critical in today’s world,” shared Ty Hallock, “where tenants need relief and landlords are willing to partner with them to get through the short-term market hurdles. We all lose when businesses don’t survive. West Michigan is still a good environment for business. We have low vacancies and great interest rates. Companies that were well-positioned before COVID-19 should come out well. In fact, for real estate investors, we don’t have the volatility and swings we’re seeing in the stock market, especially with diversified assets.”
Retail properties will undoubtedly be hard hit and slower to come back. As companies become more adept and efficient at working from home, we may see a shift in office environments and their space requirements particularly in general office. Companies will assess how employees can work remotely and still have their businesses operate efficiently.
Another change we may see is a return of certain businesses to the United States. There is a growing “buy local, buy American” sentiment and desire to have products such as personal protection equipment (PPE) and pharmaceutical products produced here and readily available. This could impact real estate markets and create demand we had not previously anticipated.
Buyers: West Michigan remains a good market for property investors who select the right partners, are patient for the right opportunities, and come in with good equity.
Sellers: Inventory is still low for industrial/manufacturing companies. Watch to see how companies determine who needs to work in the office and who can easily work from home. Look for the emergence of new companies and start-ups in need of space.
Tenants: Smart landlords want to keep good tenants. Contact your building owner and revisit your lease. Get creative and come up with a win/win scenario together.
About First Companies:
First Companies offers commercial real estate, construction, and property management services in Michigan and surrounding areas. For over 50 years, the company has built a reputation for creating exceptional spaces where businesses thrive. The company’s experience and expertise spans locating and developing land and facilitating the sale or lease of properties – to all aspects of construction and providing ongoing property management and maintenance services to owners. First Companies is well-known for its ethics, integrity, and creative problem-solving, with highly experienced professionals in each business area.