Published October 31, 2022

While the vast majority of CEOs believe that 2023 will see a 12-month downturn, even more are confident that their companies will see growth in three years. As such, investors should focus on their three-year plan and how they can capitalize on a downturn.

As the rising rates and buyer/seller expectation gap drive uncertainty, many investors move to the sidelines. With less competition and more value-add opportunities, commercial real estate investments are positioned to deliver the strongest return over the long term. Here are a few reasons why:

  • Commercial real estate markets are inconsistent: unlike the housing market, there is very little consistency between geographical and vertical markets in commercial real estate. While office prices may be down in Seattle, industrial might be up in Phoenix. This scenario enables an investor to sell high and in their current market and buy low elsewhere.
  • Value-add opportunities: while some investors prefer the hands off, collect the check, coupon clipper investments, many are looking for value add opportunities. With a short downturn, below market rents mean room for growth in the future.
  • Unique assets: assets which are rarely traded may come to market because the current owner feels that they need capital to weather the storm.

These are the perfect opportunities to reposition a portfolio or enter a market. Investors should plan for the future when they face less competition and can reap long term rewards.