Retail is one of the industries hardest hit by the digital revolution. Traditional storefronts have taken a big hit in recent years, creating a pool of eager landlords who have become more flexible in their leasing terms to accommodate for the hit. In many cases, this has led to more bargaining power for retailers looking to sign a lease, but it has also created a buyers’ market; if you’ve ever wanted to own commercial retail space, there has never been a better time.
It also means that many are now willing to sell – and sell fast. Where could you find financing for such a large, quick acquisition? Conventional lenders are likely to look at commercial retail locations as a risky investment, reducing the odds that they’ll approve financing for an acquisition. For a quick loan that’s more flexible than the banks, direct private lenders are the best go-to option out there.
Why are retail properties struggling to stay open?
According to the U.S. Census Bureau, ecommerce sales have eclipsed brick-and-mortar retail sales. Analysts estimate that the ecommerce industry will keep growing to hit nearly $4.5 trillion in 2021, a $3.5 trillion spike in just a few years. As more customers turn to ecommerce giants, retail stores are struggling to keep their doors open.
The need to advertise to passersby through retail location signage has also diminished with the rise of ecommerce. The internet has undermined the marketing edge provided by prominent signage in prime retail locations. Instead, email campaigns, social media, online advertising and royalty programs have filled in as the digital equivalent of the big sign customers drive by every day.
Financing a purchase in a buyers’ market
With the uncertainty surrounding the future of brick and mortar retail, landlords or downsizing chains are often eager to sell their commercial space on favorable terms, and some may want to sell quickly. Taking advantage of these opportunities often requires financing, difficult to acquire in an environment where conventional lenders are more conservative and may not lend in the face of the challenges brick and mortar stores are facing.
Moreover, commercial retail acquisitions are often time-sensitive, and direct private lenders have the flexibility to move more quickly than conventional lenders. Because direct private lenders have immediate access to capital, they are able to secure the funding you need quickly — sometimes in as little as 10 days if there are no surprises in the application process. They also have fewer restrictions on how they choose to invest their money and with which type of borrower, allowing greater flexibility and speed during their review process.
“Time is often of the essence when a commercial real estate opportunity is on the table,” said Kevin Wolfer, CEO of Kennedy Funding Financial. “As long as the application is thorough and borrowers are transparent about any potential hiccups, we can secure funding in weeks or days instead of months.”
While banks often won’t touch an investment in commercial retail space while the market is down, private lenders see the opportunity and can quickly finance a purchase while the market is still on your side. Don’t risk rejection at bank after bank while there are hard money lenders ready to work with you to make the acquisitions you need. There’s never been a better time to buy commercial retail space, and private lenders can help you be sure you don’t miss out.