2020 Commercial Real Estate Trends

2020 is finally winding down! I am still amazed at what a whirlwind year this has been.  Earlier this year, I wrote about the alternative transaction types that were becoming more prevalent than the standard traditional transactions.  Those alternatives have only continued (i.e. note sales, loan modifications, bankruptcy sales).  As we have been moving towards the end of the year, other trends have also been popping up.

Rushing to Close

Typically, we see a rush to close at specific times of the year such as the end of the quarter and the biggest rush is generally to close before the end of the fourth quarter. This year has been different because we have seen many deals that have been rushed closings for reasons like the election, business shutdowns, and businesses that have aggressively grown because of the shutdowns and other reasons personal to the parties.

Acceleration of Closing Date

So often, transactions extend out the closing date but recently there has been a trend toward moving the closing date up.  Sometimes rushing to close even a month prior to the scheduled date.

Hair on the Deal

I do not know why but I hate this term!

To say that there has been more complexity of transactions this year would be an understatement.  There has been a lot of creativity in the market but also many short sales, bankruptcy sales, clouds on title, etc. 

Litigation

With the push to rush closings and a higher level of complexity in the deals, I have been seeing a bump up in litigation between parties and even with outside parties.

Renegotiating

Renegotiation is of course very common in most commercial real estate transactions. This year has had many deals that renegotiate but especially happening in light of COVID-19.

1031

We have definitely seen an influx of 1031 Exchanges.  The majority of transactions involve the use of exchange because of both the pandemic and the highly political year we have had.  Some parties have shared fear of tax law changes.

I always enjoy learning and the changing market keeps me on my toes.  I am grateful for the continued volume of transactions and look forward to the next year and next trends.

If you have questions about any aspect of Commercial Real Estate you would like me to address in a “Minute with Michele” blog, shoot me an email! michele@seiboldgroup.com