The COVID-19 pandemic caused many challenges to the real estate industry. But, over the last few months, it has been experiencing some wins. For example, more people are moving to the suburbs to get away from urban areas where COVID-19 is running rampant on the dense population. They are more eager to buy rural areas where there’s more space for social distancing. There’s also a boom in the sales of vacation homes. Because travel for leisure is banned or highly discouraged, people have been seeking respite in a vacation home instead. This makes sure that they remain safe from the coronavirus while on vacation.
But there’s one part of the real estate industry that’s been facing many challenges since the start of the pandemic. And that is the rental aspect of real estate. Landlords of residential and commercial establishments have been coping with the struggles caused by the pandemic.
The Loss of Residential Tenants
The pandemic caused many offices to close their doors and conduct their business remotely. Establishments such as bars, restaurants, and other places for entertainment also closed their doors. This is to discourage mass gathering. Because of this, night outs with friends stopped occurring. So people moved back to their childhood homes to stay in quarantine with their families. If not that, then they still moved to the suburbs to avoid the influx of COVID-19 cases in cities. They found that now is the best opportunity to finally buy a home in the suburbs. They have more space at home and they can practice social distancing more easily.
As a result, residential places started emptying out. Landlords started losing some of their tenants. Although many of them started lowering their rental fees, many people still opted to move out of their apartments and leave the urban areas. It helps, though, that letting agents are there to find tenants who can help landlords survive the fallout from the pandemic.
The Loss of Commercial Tenants
The pandemic caused many businesses to close down for good especially because they couldn’t pay for rental fees. The quarantine restrictions discouraged people from going to the movies and hanging out in bars and cafes.
And if businesses didn’t close down for good, many of them still gave up their physical stores. Instead, they moved their services online. This is especially prevalent in the retail industry. People have become more reliant on online shopping for their wants and needs. As a result, many businesses found their physical stores obsolete.
These business closures or transition to online services caused landlords to lose a lot of their commercial tenants. Much like in residential places, some landlords lowered their rental fees to attract more tenants. But online shopping became even more popular. And it decreased people’s interest in visiting shopping districts.
The Costs of Extra Precautions
Some landlords were blessed with loyal tenants. But they still faced some financial challenges. And these were caused by extra costs because of the pandemic. Buildings and establishments shared by the public needed to be disinfected on a routine basis. This is to make sure that the people occupying these spaces remain safe from the virus.
This meant that landlords have to shell out money for labor and resources. These are for the disinfection of doorknobs, hand railings, elevator buttons, and everything else that people touch. The temperature must also be checked before people enter such establishments. All of these require landlords to improve cleaning, janitorial, and security support.
Landlords have been facing issues that are caused by the COVID-19 pandemic. The sheer loss of tenants has impacted their business. It caused them to lower their rental fees despite the fact that they also needed to shell out more money for health and security precautions. But some cities are easing their quarantine restrictions. And there’s been some progress in the development of the vaccine. All of these things will help landlords eventually thrive after the pandemic.