Conquering Concerns in Commercial Real Estate

Ciminelli Real Estate Services recognizes then tackles common worries

As a commercial business owner, it would be naive to assume headwinds regarding the market won’t come your way. Rather than induce anxiety, it’s best to be aware and prepared for the biggest concerns that face the commercial real estate market in 2025.

“We often find that these concerns become connected, creating a snowball effect, which we want to get ahead of,” says Stewart Proctor, CCIM.

Recognizing these concerns can help the Ciminelli team to help you address and mitigate the issue.

“We operate as the quarterback in these situations alongside our strategic partners,” said Proctor.

Where the Ciminelli team are the sales/leasing agents and property managers, they enlist a supporting cast including architects, designers, litigation attorneys,  planners, contractors, and other professionals to assist based upon the company’s concern.

Ciminelli works alongside clients and strategic partners to ensure good year-round preventative measures are in place such as testing generators weekly and checking that all technology has effective backup systems. Should a storm strike, they are out assessing damage to properties as soon as it’s safely possible.

By leveraging their extensive experience and full-service capabilities, Ciminelli can provide tailored solutions to help clients effectively manage the various challenges facing the commercial real estate market today.

→ Interest Rate Increases

As interest rates rise, the cost of borrowing increases, making it more costly for investors to pursue new projects or refinance existing ones. This can lead to reduced demand in commercial real estate and lower property values.

To combat this, the Ciminelli team assists clients in exploring alternative financing options such as fixed-rate loans, interest rate caps, or private equity partnerships.

→ Economic Uncertainty and Recession Fears

Over the past few years, the possibility of a recession has been lingering. Recession can lead to reduced business spending which in turn lowers demand for commercial space, creates higher vacancy rates, induces downsizing, and  decreases rental income. This almost always puts downward pressure on rent.

Ciminelli offers portfolio-management services to diversify and balance risk, ensuring clients are not overly exposed to volatile sectors, repositioning properties to attract stable, recession-resistant tenants.

→ Shifts in Work and Consumer Behavior

Since the emergence of COVID-19, there has been a continuation of remote and hybrid work models. Many companies have either downsized or eliminated traditional office spaces, leading to higher vacancy rates and reduced service and merchandise demands. Adaptability is key, and Ciminelli has helped many clients reimagine and repurpose their office spaces. They work alongside strategic partners to offer interior and exterior planning and redesigns to convert spaces into flexible, hybrid-friendly environments, or to reconfigure retail footprints to accommodate e-commerce integration.

→ Inflation and Rising Operating Costs

Rising inflation impacts virtually every area of life, especially when it comes to a business. Higher costs reduce profitability, can lead to increase property taxes, a rise in utility costs, and more.

Ciminelli can help clients manage swelling costs by conducting operational audits to identify efficiencies and cost-saving opportunities such as implementing energy management programs, optimizing service contracts, reducing maintenance and operations costs, and exploring purchasing in bulk.

→ Regulatory and Political Risks

During an election year, concerns increase around shifting politics and the potential change in regulations which often come with new administrations. Morphing (or fluctuating) regulations and zoning laws can impede an owners’ ability to develop or repurpose properties.  Changes in tax policies could also affect property taxes, capital gains taxes, or deductions can increase the cost of doing business.

As a result of staying informed on local laws and regulations, Ciminelli offers services in navigating zoning changes, obtaining necessary permits, and ensuring compliance with local, state, and federal regulations.

→ Hurricanes/Natural Disasters

Possibly the hardest to predict is the occurrence of a hurricane or natural disaster. As the 2024 storm season proved for Florida and beyond, the impressions of a weather-related event can be devastating, be it flooding, property damage, or equipment damage. Contact Ciminelli to discuss how they can help assist during challenging times.

Ciminelli Real Estate Services

CiminelliFlorida.com  |  (850) 765-7063