Shopoff Expects Pricing, Rents to Fall in the Short-Term

While many investors are trying to make reasonable and informed forecasts about the depths of what is likely an oncoming recession, it is difficult to nail down. That is because, in many ways, this recession is not like those that have come before, according to Bill Shopoff of Shopoff Realty Investments. The economic disruption is related to a public health crisis, and can’t be rectified until the public health crisis is. That is an added challenge to real estate investors. In the short-term, he predicts decreased rents and pricing, but is still hopeful for a swift recovery.

“Rents will also be reduced in the short run, and deferred rents will be an issue, but this downturn unlike those in the past, is not as a result of overbuilding or other real estate based, or even general economic issues,” Shopoff, president and CEO of Shopoff Realty Investments, tells GlobeSt.com. “There may be lingering pricing issues, especially in weaker markets or with certain asset classes, but overall, we are optimistic that the rebound will come sooner than later.”

While he is optimistic in a long-term recovery, he is also realistic about the disruption to come. “We certainly anticipate that the market overall will experience significant price decreases and rent issues,” he says. “Pricing will likely be much lower, but we also don’t expect to see many assets transact at those prices.”

There will be opportunities, of course, to find a deal, certainly below the record pre-pandemic pricing that was the norm earlier this year. However, those opportunities will only benefit a handful of investors experienced in distressed transactions. “For the most part, only very unique opportunities will be found, and it will primarily take companies like ours, who have direct relationships, a reputation for solving issues, and the right resources and capabilities, to uncover these hidden assets,” says Shopoff.

That will happen once the recovery is underway, but the recovery is still a question mark. “The depth and duration will really depend on the timeline of the virus, and when we can get back to business as usual,” says Shopoff. “That said, I do believe the market will recover fully within a year and am looking forward to seeing many of our projects come to fruition once this downturn has run its course.”