The Azucena Take: Potentials of Investing in Commercial Real Estate
Even though there are some hurdles that we need to overcome, the worst of the pandemic is now behind us. From the vaccine rollout to a number of government stimulus along with investor confidence, 2021 is looking to be a promising year. It also means that it will be a good year to invest in commercial real estate.
Based on the data collected by Marcus & Millichap, Q4 2020 saw a massive rise in commercial real estate transactions. While slightly below the numbers of 2019, it was one of the most impressive gains on par with the last several years. If this trend continues, 2021 will see even greater gains that will make up for what was lost.
The $900 billion stimulus that passed in January has also helped renew confidence in the market. Key points of the stimulus are:
$284 billion infusion into PPP funding which allows more support for small businesses.
$600 stimulus checks and additional support for unemployment will help boost consumer spending.
Additional rounds of stimulus will also put investor concerns at ease.
This will all help sustain the economy until the pandemic is brought under control.
Fueling investor confidence is the amount of capital and savings. There is an estimate of $5 trillion in US market mutual funds and $16 trillion in savings deposits. Combined with low interest rates and debt free financing, this will ignite a greater interest in commercial real estate.