How to Keep Your Commercial Property Profitable Even During Recession?

By Kate Easom 2016-09-29 00:00:00

Considering investment, commercial property usually bears the question whether it is theright time or not. You always need to keep in mind whether such huge investment during an economic slow-down will be wise. Investing in commercial property during arecession is taken to be quite risky.

On the other, it is regarded to be a great time for investing in commercial property during economic slow-down by some businessmen as they can snap great property at great places within low-budget.

So, while one side is facing loss due to the recession, another party is having greater profit. But, if you are a commercial property holder, you need to know the trick of having your share of profit from your property even during therecession.

Investing in commercial property is far more expensive than investing in residential property. Commercial estates’ market is not solely dependent on the economy of the country. It rather depends on the economy of your town or neighborhood.

If your property is situated in a better location, you tend to have much profit than the residential estates. But the whole scenario has changed in last few decades of this calculation. The commercial property owners are facing huge loss due to the recession. The rental values dropped to the lowest. Lenders are no more willing to loan money on this due to this economic tremor. This financial environment has curbed the growth of new businesses and hampered the existing ones from expanding. This has created a vicious downward cycle of the business. Companies are no longer interested in commercial properties and investors are dumping the market.

During this commercial foreclosures and vacancies, you may be forced to sell your property in less than the actual market value in order to keep yourself afloat. These factors are only increasing the risk of commercial property investment. However, there are many who want to take risk of investing in commercial estates even during the economic boom. This comes as a golden opportunity to new tenants opening the door of the commercial property. These low prices in commercial estates are inviting more investors. Many new small businesses are finding their ways to the greater market. This may be one effective way of surviving during therecession.

As mentioned before commercial estates’ markets do not depend on the national economic condition of the business, there can be regional markets where thecondition is profitable and favorable though it may be depressed nationwide.

Another problem which the property holder may have to face is about obtaining capital as the market is unfavorable to invest. So, for many individuals or small companies, it will be too risky to invest such huge amount.

According to the Altus Group, one of the famous real estate consulting agency, it will be better to invest collectively which includes commercial property funds, Real Estate Investment Trusts (REITS). These are traded protection which allows smaller investors to become a part of thelarger commercial project. REITs include various office buildings, hospitals buildings etc. You can buy and sell them as you wish or become a shareholder. These REITs have become very popular in last few years as a positive investment which secures your share of profit even during thefinancial boom.

Thus, there are several ways of keeping your profit level up and intactduring therecession. You just only need to know the business strategy. For better help, you can also consult with commercial estate agents.

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