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How COVID-19 Could Bring New Opportunities for Commercial Real Estate in 2021

by Neil A. Dolgin 

It’s no secret that the collateral damage to virtually every industry wrought by the pandemic over the past year has been swift and unprecedented.  Commercial real estate (CRE) hasn’t been spared. Following the nationwide lockdown last spring, CRE firms both large and small have been forced to downsize, digitize operations and adjust to the “new normal” – all the while taking proactive measures to ensure the health and safety of their employees, as well as the financial health of tenants. 

With an economic recovery that is heavily dependent on widespread availability of the various Covid-19 vaccines and preventive measures, the length of the downturn and its long-term impact remains uncertain. As I write this, the vaccine rollout has been slow with shortages in New York City and Long Island where most of our clients are located. 

Likewise, some commercial real estate asset classes such as retail and office are seeing more negative impacts, while the performance metrics of other industrial property types such as factories and manufacturing facilities are holding relatively steady, and in some instances, beginning a return to normal. With that in mind, let’s consider several trends we’re seeing for 2021.

Retail Revamped 

Real estate tied to customer foot traffic and attendance – like gyms, hotels, resorts, and restaurants – are still feeling the effects of the pandemic, and the landlords behind these properties continue to share in the suffering. As the pandemic has forced consumers to change their shopping habits, the continued shift from brick-and-mortar retailers to e-commerce has increased the need for industrial and last-mile logistics facilities throughout New York City’s outer boroughs and Long Island. And with more online retail options than ever before — from medicine and groceries to  electronics, clothing and more — this increase is likely here to stay. 

Industrial – Small and Medium Properties

The Industrial sector seems like the first to recover. We are seeing more renovations and new constructions. We see greatest activity in the small to medium-sized building space as these properties are very attractive to companies in the industrial sector, whether they are start-ups or established companies that are looking to downsize. Several of our start-up clients in the building and home improvement industry are looking to sign multi-year leases with the option to renew, particularly within the outer boroughs of New York and Long Island. As the economy starts to recover, small to medium sized industrial buildings will be rented up quickly and likely by end-summer. Then the larger buildings will follow. 

Restaurants – Poised for a Rebound 

Restaurants have really suffered. New York’s landmark 21 Club was forced to close this past December after nearly 100 years in business, while well-established casual dining brands as Friendly’s, Ruby Tuesday, Applebee’s and many others have filed for bankruptcy.  Vacant restaurants that are in ready-to-move in condition will continue to be very attractive to investors and operators looking for a breakthrough location.   With delivery services growing rapidly, restaurateurs and chains alike are also designing new locations with separate entrances and areas for meal pickup to avoid disturbing dine-in customers. The challenge for commercial real estate brokers marketing these properties is to help clients select the right one for their needs and then work with them to help maximize its full potential.  As the pandemic subsides, people are going to want to go out to eat and pamper themselves after being locked up for a year and a half. 

An Eventual Return to Office Life

At the beginning of the pandemic, most businesses that weren’t deemed essential were forced to close their offices. Many companies are still not operating at full capacity as many employees continue to work from home either out of necessity or by choice. However, the majority of them still benefit from working onsite at least part time. 

We are working with our commercial office clients to help them adapt to the changing needs, as well as carefully advising them on the best ways to reconfigure their properties accordingly. 

CRE — Still a Healthy Investment

Our knowledge of commercial and industrial buildings and how they can be divided up is also a real advantage for other investors, owners and managers. There are opportunities for those looking to optimize the long-term growth potential of distressed real estate assets in the wake of the pandemic. Already, we are seeing this to some degree, but by the end of the year I think we’re going to see many more opportunities for investors, particularly REITS and other institutional real estate funds, who stand to make substantial gains as the economy recovers. There’s a ton of money from large investors waiting to pounce and these investment opportunities are going to be gobbled up by end-2021. 

The other side of the equation is that unlike the 2008 financial crisis, which was directly linked to the U.S. housing market and enabled investors to “get ahead of it,” the current economic fallout caused by the pandemic completely caught the CRE market off guard, causing damage to otherwise sound assets. As a result, assets that wouldn’t otherwise be distressed or have had a significant drop in value have suddenly come onto the market. 

Market or Bargain Rates?

Our knowledge of commercial and industrial buildings and every segment of the CRE marketplace helps us determine if a deal is ‘real’.  As building owners, managers and brokers, we know the numbers and can envision a building’s true income potential.  With taxes and operating expenses remaining unchanged in this challenging environment, market rates are expected to continue to prevail. 

The KDA Difference

Our firm, Kalmon Dolgin Affiliates (KDA) is synonymous with the management, leasing, sale and marketing of commercial and industrial properties. With 117 years under our belts, we know how to deliver for our clients despite the adverse conditions and we can spot opportunities without being all over the board. That said, while commercial real estate has taken a beating from Covid-19, there’s optimism too.   

Commercial Real Estate firms and investors with broad exposure across multiple sectors who can harness their strengths in the current climate are poised to thrive even more once the industry rebounds, which it will, even with office space and other sectors facing significant challenges.


Neil A. Dolgin is co-president of Kalmon Dolgin Affiliates. Founded in 1904, Kalmon Dolgin Affiliates (KDA) has grown into one of the New York metropolitan region’s leading commercial and industrial real estate firms. Kalmon Dolgin Affiliates specialize in all aspects of real estate services for developing, managing, selling, leasing and marketing commercial and industrial property. KDA’s highly-trained professional brokers offer clients a practical, street-wise approach to commercial and industrial real estate brokerage, leasing and sales, supported by the latest in real estate marketing, management and research technology.

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