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The Impact of COVID-19 On South Florida Real Estate

RCG News


June 1, 2020

The coronavirus pandemic that is sweeping the globe has had a massive impact on financial markets and the economy in general. In South Florida, many commercial and residential property owners are naturally concerned about the price points of real estate. However, the good news is that amidst the COVID-19 crisis, South Florida’s real estate market is weathering well.

This was established during the Commercial Real Estate Development Association’s roundtable by experts who also determined that 85{6fe69a26c2c06f487892d02889af3b20abb8777b8d8403940cba7c61f59e1d12} of Floridian tenants were able to fulfill their rent obligations when the pandemic hit in April. The immediate panic has lessened a bit, especially for tenants who received loans from the government.

This includes small business owners who are also working to ensure employee safety as the economy starts to recover. However, the experts also established that new deals will be delayed as businesses wait for a vaccine to be developed that can curb the spread of the virus and thus allows them to resume operations safely.

This has lead to an increase in subleasing, a reduction in rental rates, office vacancies and most significantly, an increase in requests pertaining to rent reductions. While banks continue to accommodate these requests, there is a concern that the sudden uptick of these requests can make the market buckle in the future.

Housing prices are not expected to drop significantly during the pandemic either. According to the group, Florida Realtors, this may be because of cautious builders who suffered during the last recession and built fewer homes in the state during the shortage.

According to the Chief Economist of the group, Brad O’Connor new home sales have dropped by about 30{6fe69a26c2c06f487892d02889af3b20abb8777b8d8403940cba7c61f59e1d12} to 40{6fe69a26c2c06f487892d02889af3b20abb8777b8d8403940cba7c61f59e1d12} across the state and also revealed that the market is different from the one that was used 10 years ago.

That’s because people are not selling their homes at lower prices. Rather, they are pulling their properties from listings and waiting for the virus to dissipate before placing them on the market again. The hope is to sell for competitive prices once the pandemic is over and the market normalizes.

In other words, while the coronavirus is impacting home sales on a global sale, the fundamentals of the South Florida commercial and residential real estate market will reduce the impact and business will resume as usual. Once the situation normalizes, demand is expected to build up once again which will stabilize the market. So while the pandemic will impact the market, the effects will hardly last forever.

Rich Commercial Group can help you accomplish your goals for property management in South Florida by helping you make informed decisions. Get in touch with us for a consultation today! Our aim is to help our clients negotiate the best terms that can protect their interests amidst the pandemic and well after it as well.