By Paul Banke

If we could use one word to describe the year 2020, I think we would all agree that “unprecedented” would be one that resonates very strongly with the world. The irony in the situation is the use of the word “unprecedented” throughout the media has become unprecedented to say the least.

A word for us in the world of Commercial Real Estate that is more fitting would be “uncertainty.” In today’s climate, the only thing that is certain is uncertainty. The effects of Covid-19 throughout various job sectors reflects two sides of the same coin. For some, Covid-19 has wreaked havoc on business and destroyed the hopes and dreams of small private owners of restaurants, retail stores, and bars. A recent study from Yelp shows 60% of business closures due to the pandemic are now permanent.

On the flip side of that coin, some industries have thrived and seen record-breaking profits during Covid-19. One-stop shops such as Target and Walmart have benefitted from consumers being able to purchase multiple items at their locations due to the average person not wanting to go outside and shop around.

So where does that leave us in the Commercial Real Estate Industry? Before the pandemic hit the USA, an obvious theme for the year 2020 was the fact that it was a hotly contested electoral year in which two ballot propositions, Prop 21 and Prop 15, could directly affect the holdings of Real Estate owners big and small. This, mixed with a state of national emergency, brought about a lot of uncertainty for Commercial Real Estate professionals and owners alike.

With the election less than 30 days away, I can recall multiple conversations I’ve had in the past week with clients in regard to their Real Estate holdings and how “if __________wins” or “if __________ passes,” “I will be doing __________. ““Please follow up with me after the election.”

Despite a tumultuous several months, we can look forward to 2021 with excitement for a strong recovery. A recent survey carried out by Duff & Phelps show 39% of directors and investors expected CRE prices to fall between 5% to 10% in value in 2020, while 31% expected a fall greater than 10% due to the Covid-19 pandemic. Even with that being said 90% expect asset pricing to go back to pre-pandemic levels by 2021.

With statistics like this, we are optimistic about strong valuations following the election. Now more than ever, we are focused on delivering excellence and helping our clients make data driven decisions so they can act with certainty.

Paul Banke is an Associate at Kirklen Investment Group and specializes in the acquisition, disposition, and exchange of multi-family investment properties in both Orange and Los Angeles County.

Paul embraces Kirklen Investment Group’s brand of building lifelong relationships with each and every client. With a tireless work ethic and by utilizing his knowledge of the market to ensure he exceeds client expectations and needs, Paul places a huge emphasis on putting client interests first and provides the highest level of service to multi-family owners and investors.

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