In a world swirling with market volatility and financial turbulence, commercial real estate (CRE) continues to stand out as a haven for both investors and owners. But let’s face it: riding out economic storms takes more than just owning a piece of real estate — it takes strategy, preparation, and a sharp eye for opportunity.
A recent article on Real Estate Business Broker Guru reminds us:
"In times of economic uncertainty, real estate has long been a pillar of stability for investors looking to shield their wealth and grow their portfolios". (Source)
And they’re right. But as we watch interest rates fluctuate, inflation pressures mount, and buyers grow more selective, it’s critical to prepare your assets for not just survival, but for value maximization when the timing is right.
Here’s Your CRE Value Maximization Checklist:
Evaluate and Enhance Property Financials:
Review your rent rolls, lease expirations, and expense ratios. Are you maximizing your NOI? Could a simple re-tenanting strategy or lease restructuring significantly lift property value?
Understand Your Exit Options:
The “Boomer Exit Playbook” concept, often aimed at business owners, applies surprisingly well to CRE. Their mantra? “Start preparing early, even if you don’t plan to sell tomorrow.” (Source)
Similarly, CRE owners should stay exit-ready. Keep financials clean, maintain building integrity, and be ready to pounce on favorable market conditions.
Stay Current on Market Dynamics:
What are cap rates doing in your market? Where’s the investor sentiment? Are you seeing shifts in demand for specific asset classes like retail, office, or industrial? Use these insights to adjust your hold strategies or prep for a sale.
Boost Curb Appeal (Yes, It Still Matters):
It’s not just about leases and numbers. Sprucing up your property’s exterior, signage, and landscaping can create a stronger first impression for buyers and tenants alike.
Plan for Tax Efficiency:
Talk to your CPA about strategies like 1031 exchanges, cost segregation studies, or bonus depreciation. These tools can help you defer taxes and improve cash flow when you do decide to sell or refinance.
The Bottom Line?
Whether you’re an owner planning a long-term hold or an investor looking to exit, the key is proactive management. Real estate may indeed be a safe haven, but only for those who prepare their assets for the inevitable shifts in the market.
As the storm clouds of economic uncertainty gather, now’s the time to shore up your portfolio, clean up your books, and ensure your properties stand tall in any storm.
Justin Langlois, CCIM is a Commercial Real Estate Advisor with Stirling Investment Advisors servicing Baton Rouge, Louisiana and surrounding markets. Please reach out to Justin to discuss your real estate investment strategies.