“How Does the Economy Affect Real Estate?”
I’ve had countless people ask me that question, and I’m glad they did.
What I’ve noticed most during these conversations is the assumption that a bad economy equals a bad real estate market.
My answer is that it doesn’t have to be that way. And it isn’t for TAG.
In the real estate market, a bad economy may be bad for the landlord, but it is good for the tenant, which is good for our clients.
During a bad economy, there tends to be a high supply of space available and a low demand for it. Businesses need less space because they are reducing their company size and make their existing spaces smaller. As a result, there is more supply available in the market than demand, and hence, the price of space goes down. Because of this, tenants are able to get better deals for a space of their choice at the lowest negotiable price.
In addition, when the economy is down, competitors at other real estate firms are discouraged to stay in the market, and so unintentionally hurt themselves by giving their potential clients to the remaining real estate brokers in the market. We have seen a large uptick in clients during every downturn.
When the economy is strong, landlords tend to make more money because businesses are growing and hiring more people, and so, are growing out of their existing space and needing more. This creates an increase in demand and thus, an increase in the price of space.
Accordingly, competitors have the incentive to come back into the market when its doing well, which creates more competition for other real estate brokers. But competition is of no threat when you continue to create value in finding the best and most affordable space for your clients. In other words, one will always have a strong business if they provide value to their clients at all times, strong and weak markets.
No one likes when the economy is in decline but Tenant Advisory Group tries to perform in a way that doesn’t depend or reflect on the economy for its success.
To TAG, client and team are the two most important factors that affect our “real estate market”. According to our criteria, if the client’ needs are being met, we are doing our job.
Therefore, one can control how you will do based on how you are running your business, working with your team, and meeting your clients’ needs. The economy does not have to be the scapegoat.