A lot has happened in the name of change after covid-19. The commercial property sector is going through a bumpy road, and so many things are there in the requirement list. The efforts of revival are also walking together.
Here is an overview of the commercial properties and changes that have happened to them after the covid-19 pandemic.
What is a commercial property?
Commercial property is a building that is used for various purposes to earn the profit. It includes private and public sector buildings and construction such as service industry, healthcare, government, civil infrastructure, telecommunication etc.
|Types of commercial properties|
|Private commercial||Private industrial||Public commercial use||Commercial landlords|
|OfficesUniversitiesSchoolsShops GaragesEntertainment Agriculture||FactoriesWarehousesSteelCoal Oil||SupermarketsShop unitsAuction buildingsWholesale buildings||Rental houses through individual commercial landlords and housing companies|
Post corona pandemic effect on commercial properties
A HINT OF THE LATEST SCENARIO
Although people are still following the prevention rules, the threat is still there; it means the ‘post corona’ term is suitable perhaps. Similar to the vastness of the commercial property market, the effects of covid-19 exist. They have changed the way people work; the need is to know what is going on in the industry after the big chaos. After all, things need to be back in control.
- Office spaces – The offices need to be ‘covid-proof’ as the people are coming back to their workplaces. There is a drastic increase in the cost of the landlords. The landlords need to ensure all the safety measures (sanitizer availability, proper lighting and space for adequate distancing, etc.) should be there. Some companies are still trying to continue work from home for either all of the employees or in shifts.
- Retail Shops and warehouse spaces – The visitors need to follow the safety measures. The retail shops need to put the covers on the public seating. People have instructions to not to gather in big groups and maintain the rule of social distancing. Due to an increase in online shopping, there can be less number of visitors.
- Rental and lease properties – Due to the income shocks, the people are not able to pay their rent on time. Some tenants have asked to the landlords for assistance, some have asked to reduce the rental amount for a certain time to work on an effective solution. The owners are trying best to make things better. In some cases, the property owners may terminate the lease if the tenant is not able to pay even a penny.
- Educational buildings – Schools, universities and other educational institutions need to go through the thorough sanitization. Proper healthcare facilities should be there for the staff and the students. Due arrangements should be there to check the temperature, and in case of any doubt of corona on any teacher/staff/student, immediate isolation needs to be arranged. In schools, most of the building will open next month with all the safety precautions, including frequent hand washing and mask.
More or less similar rules apply to all types of commercial properties. The first demand is to inspire the work from home culture if that is not possible, then all the safety measures should exist without any failure.
The commercial mortgage industry after covid – 19
The world needs to move on, and for that, new investments in harmony with the current conditions are necessary. However, before you start, below is the mention of the current average condition of the commercial mortgage in the market.
|Interest rates from||Maximum LTV||Minimum loan amount|
The minimum loan amount limit may vary from one lender to the other; it is the idea that can help you make a better and informed conclusion.
- The investment plans of real estate in the commercial property sector are also in threat. The market is down (as we ALL know) and the revival is lingering. There are more number of empty offices and shops to see nowadays than ever.
- The businesses are drained in their financial capacity, how one can think to plan an instant purchase. Yes, the normalcy is back, and the prices of commercial properties such as retails stores have dropped drastically. It is somewhere a good thing for the buyers because the prices in the overall market are down. Obtaining a commercial mortgage should not be a difficult task.
- The earning assessment rules are stringent now, and the mortgage brokers are giving support with rational predictions on the affordability. However, the rate of interest is low.
The borrowers are curious to take the benefit of the opportunity. They want to take cautious borrowing decisions using the available on the websites of the brokers and lenders in the UK. But repayment capacity rules are stricter and only a financially strong applicant can borrow.
One the part of affordability the conditions are certainly difficult, but on the part of the total cost and the rate of interest, the circumstances are in favour.
How can commercial property owners prevent loss after covid-19?
The property owners need to make strategy according to the changed economic conditions and squeeze the threats on their business.
- Changing the use of a property is a worthy option. Transforming a restaurant into a hot food takeaway, changing a hostel into a storage space etc. can help a lot.
- Make use of underutilized parts of a building but starting new activities. For example – a school can start classes for extra courses in an abandoned part of the school building.
- Make your building ‘covid-proof’ to make it look safe for the visitors. People are super conscious about the sanitization and hygiene thing.
If you are confused, take expert advice because it is already a second chance for any business if it is trying to revive. Corona has reduced the number of second chances for us all, and it is vital for us not to miss our possibilities to win again.
The commercial property industry, like any other industry, is going through the difficult time. The struggle is many miles long, and sooner you start your revival strategy, faster will be the delivery of relief.