It’s no secret that retail real estate took a hit during the COVID-19 lockdowns. Businesses shut down or went fully online, leaving many retail real estate investors with losses and no easy way to find new tenants. However, not all is gloom and doom for the retail real estate industry. In fact, it’s made a surprising comeback and there are ways investors can once again turn a profit on their properties. Following are some ideas current and would-be retail real estate investors may want to take into account in order to maximize profits and reduce losses.

How to Turn a Profit on Struggling Retail Real Estate  

Targeting Ideal Tenants

Not all businesses struggled during the COVID-19 pandemic. Grocery stores, discount stores, wholesalers, and pharmacies performed well during this time period and will likely continue doing well for the foreseeable future. Medical facilities such as clinics and emergency care centers are also strong performers. A retail space owner should look for ways to make his or her property attractive to any of these businesses and target companies that would likely be interested in leasing the space. It may be a good idea to talk to a commercial realtor who may be aware of businesses looking to expand or open new locations to find possible clients.

Repurposing Space

In some instances, it is not possible to find ideal tenants for a particular space. It may be the wrong size, in the wrong location, or simply not in demand for a variety of reasons. In such instances, an investor will want to consider repurposing the space to make it attractive to current and future clients. This step should be taken with care, as an investor could lose even more money on a property if the modifications aren’t done right and/or if there is no demand for the repurposed building. However, investors with the right financial resources and prime business locations could turn long-term profits by making key changes to properties to enhance long-term usefulness.

There are many ways in which retail space can be modified. Shopping centers, for instance, can be converted into hybrid industrial facilities that include both wholesale distribution and retail space. If a retail venue is large enough, it could be used as a fulfillment center or warehouse; both are in-demand facilities that should have no problem finding good tenants. Alternatively, smaller spaces could be turned into self-storage facilities for businesses and individuals alike.

Mixed-Use Development

A mixed-use development is one that includes both residential and commercial facilities. These developments are becoming increasingly popular as they offer shops easy access to clients while providing individuals with a conveniently-located place to live. Investors considering this option should talk with a local attorney familiar with city zoning regulations as well as potential financing companies that can cover the cost of the development. It may require far more capital than the options listed above, but the profit potential is worth it if the retail real estate is in the right neighborhood.

Investors who are struggling to turn a profit on a real estate investment should consider all options before selling the profit at a loss. With a bit of research, hard work, and financing, currently unprofitable investments can be transformed into ones that will generate income both now and in the future. Contact Peak Commercial today to learn more and start working with the best.