The commercial real estate market in the US has been experiencing a downturn for the past year, with the values of office, retail, and apartment buildings down by 11%. “The commercial real estate crash is happening,” Nick Gerli, CEO of Reventure Consulting, Tweeted earlier this week.
“The problem is that there is a $1.4 trillion “Wall of Commercial Debt” coming due in next couple years,” he explained. “Most of this debt is held by banks. And a lot of it will go into default and be foreclosed on.”
“We’re already seeing owners of office buildings, malls, and apartments “walk away” from their properties… In some cases, the values have gone down 50-60% below what they paid for the property.”
Gerli sources Bloomberg when noting that, “Office buildings are going to get hit especially hard, because work-from-home has lowered occupancy rates. Meanwhile, interest rates have doubled over the last years, meaning owners who need to refinance are now losing money on their property.”
This has made many in the industry nervous about the future of real estate and the impact it may have on their income. The chatter of a real estate recession has been present all year, but things haven’t gotten quite as dire as some expected – yet.
As a real estate agent, there are still various ways to weather this situation, plan ahead, and continue to build your business. To help, we’re sharing five effective ways to help real estate agents thrive during a commercial real estate crash.
1. Expand to Other Specialty Areas
Although the commercial real estate market is currently experiencing a downturn, other specialty areas are still thriving.
You can consider expanding your expertise to other areas like residential real estate, luxury real estate, rental properties, property management, and even project management. This way, you’ll not only have a wider scope of clients but diversify your income streams. A commercial crash sounds scary, but it may not necessarily lead to a full real estate recession, so now is the time to expand your specialty areas.
2. Focus on Customer Relationship Management
In a time of crisis, building solid relationships with customers is essential. Increase your communication with your clients and be proactive in providing them with market updates. You should also ask about their future goals, so you can anticipate their needs and remain top of mind.
To keep yourself visible in your community, you can organize virtual webinars or workshops to provide useful insights for potential buyers and sellers. Use social media videos to share market updates, give buying and selling tips, or even just talk about your local area and why it’s so ideal.
Staying in touch, remaining visible, and offering value-added services will go a long way in retaining clients – and finding new ones! Especially through the summer, it’s prime time to get out into your community, meet more people, and build connections, so that you’re always top of mind when people in your area need an agent.
3. Develop Niche Marketing Strategies
Real estate agents have always relied on traditional marketing strategies such as flyers, brochures, and billboards to gain market share. However, during a commercial real estate crisis, you should develop niche marketing strategies to stay competitive.
This might include using digital channels to target specific client segments based on their demographic, industry, or geographic location. A focused approach will help you become more effective in reaching your audience and promoting your services.
Rather than shrinking your marketing efforts out of fear, now is the time to double down.
4. Invest in Technology
The real estate industry is adopting advanced technology at an unprecedented pace, and you should not be left behind. Investing in virtual technology like drones, 3D modeling, or virtual tours may be necessary to deepen your engagement with clients, track investment performance and make informed long-term decisions.
Utilizing CRM tools, social media, and automation can also help streamline business processes and improve productivity, freeing you to focus on core business activities.
5. Deepen Your Knowledge
As an agent, industry education and mastery is a continuous process. Since the market is constantly evolving, it’s advisable to continue to develop your skills and knowledge of the commercial real estate industry. Attending industry conferences and seminars or earning new certifications can better position you as a thought leader and help you maintain an edge over competitors.
Buyers and sellers are anxious about the market, so they want an agent that they feel they can trust. By becoming that agent, you’ll have a competitive advantage over your competition. Stay informed on new regulations and finance trends to gain a better understanding of how the market will shift in the future.
Don’t Like Talk of a Commercial Crash Stop You in Your Tracks
During a commercial crash, or any type of market upheaval, it’s easy to feel hopeless and anxious, but there are still ways to thrive in the industry. By taking a proactive change management approach, implementing effective marketing strategies, investing in technology, and deepening professional knowledge, you can stay ahead of the competition and provide your clients with top-notch service. Remember, success in real estate comes down to preparation, resilience, and adaptability.
