The pandemic left commercial property markets in a turbulent state, as the rise in remote work left thousands of office buildings empty and borrowers struggled to keep up with record-high interest rates. As the traditional 9-to-5 workweek was slowly replaced by hybrid or fully-remote work, this affected office vacancies rates, which saw a record-breaking shift in recent years. In fact, in the fourth quarter of 2023, the national office vacancy rate rose to 19.6%, a staggering increase if you consider that pre-pandemic rates were around 16.8%. This slowdown not only impacted landlords and developers, but restaurants, construction firms, and other small businesses dependent on office workers.
However, things seem to be shifting in a new direction. More and more commercial real estate firms are offering flexible configurations and contracts, and it’s evident that commercial real estate stocks are making a comeback. That means you need to capitalize on this resurgence in your future commercial real estate transactions. Here, we’ll investigate the reasons behind this CRE stock revival and how GPs can leverage tech tools to maximize revenue.
What’s Behind the Commercial Real Estate Stock Recovery?
CRE stocks are picking back up following property prices hitting low points. The S&P 500’s real estate sector was up 10% over the past three months. Among other factors, the 10-year Treasury yield, which is the sector’s standard point of reference, has also been holding steady at 4%. This bond represents investor confidence, and it affects your commercial real estate transaction because the yield influences mortgage rates.
Commercial real estate firms are pivoting from office buildings, and focusing on cell towers, self-storage facilities, and senior living places, as these sites have all shown resilience despite market challenges. There has also been growing optimism around the Federal Reserve’s potential rate cuts in September. With its short-term policy rate at a record high, investors are hopeful that relief is in sight. This market recovery is expected to last for a few years, which will mean an uptick in commercial real estate transactions. You need to ensure you’re in a strong position to take advantage of this resurgence – and tech is the way to do it.
What to Look for in a CRE Investment Management Tool
Maximize the value of your commercial real estate transaction by using technology that will streamline your operations. Here’s what you should consider for your investment management tool:
- Investor Database Management: Find a comprehensive management tool that is specifically designed to streamline commercial real estate transactions. Selecting one that allows you to access, sort, and manage your investors, partners, and important documents is crucial. Learn more about other considerations for your investor database management tool.
- Automated Distribution Payments: Distribution payments can be confusing and laborious. GPs need tools that make this process easier, and one way to accomplish this is to have an investment management system that includes automated distribution so investors receive their distributions quickly and consistently. A tool that supports different complex distribution structures is ideal for CRE transactions. Learn more about how to streamline this intricate process.
- Integrated Banking: Manage your finances and stay organized with banking features that are integrated right into your investment management platform. Organize bank accounts and move money instantly, a feature your investors will surely appreciate. Better yet, integrated banking ensures that you can earn interest on your committed capital, even while it’s sitting in your account uncalled. Learn more about how to maximize your revenue with integrated banking features.
- Increased Investor Satisfaction: Keep your investors engaged with an efficient investor portal where they can access their portfolios and other important documents. Find a solution that automates certain processes, like sharing information with LPs, so that you can focus on your next commercial real estate transaction. Learn more about how to free up your time with more efficient software.
- Capital Raising Software: Commercial real estate transactions are all about sourcing funds to finance renovations or even the acquisition of a new property. Raising capital can be time-consuming though, so find a tool that will streamline the process with software that can track investor information, foster better communication between all involved parties, and securely store important documents, like financial reports or transaction histories. Learn more about finding a seamless tool to enrich capital raising efforts.
Capitalize on Covercy’s Comprehensive Platform for Your Commercial Real Estate Transactions
Commercial real estate firms have had to change course in recent years, from focusing on office spaces, to multi-family properties and retail buildings. As the jobs market slowly improves and with a hopeful rate cut on the horizon, CRE experts are cautiously optimistic and expect a comeback soon.
Don’t miss out on your chance to take advantage of the CRE resurgence. Streamline your processes with Covercy’s efficient investment management platform so you can focus on what really matters: maximizing your capital and enhancing value for your investors. Book a demo today.