After the devastation of Hurricane Sandy, commercial real estate transactions may be on the upswing in Long Island. The flooding and storm surges that preceded landfall and the wind and rain that accompanied the storm caused billions of dollars in property damage. Many business owners in Nassau and Suffolk counties returned to their businesses after the storm to find massive damage. Many properties were a total loss, and most had significant loss.
With the help of lending from the Small Business Administration and other disaster loans, many businesses have begun the rebuilding process. Unfortunately, due to the recession, some businesses were already so financially strapped that this new setback found them with an already depleted reserve. Many of these are already in too much debt to take advantage of the offered loans and will have to go out of business.
In addition to the businesses that close as a direct result of Hurricane Sandy, many other businesses are experiencing a secondary financial impact. Businesses in the midst of rebuilding are forced to cancel contracts with vendors and other companies so that they can direct their finances toward the restoration process. These vendors then experience economic losses that may lead to more business closings.
All of these business closings results in an increased number of available commercial real estate properties. These properties can often be acquired for a significantly lower price than they might have sold for a week before the storm hit the area.
Risk of Purchase
However, purchasing these properties comes with a significant risk. Buildings that appear sound may conceal hidden storm damage. Insurance companies that have been hurt by the recent massive payouts may be reluctant to ensure properties or charge expensive premiums.
Potential for Profit
On the other hand, a purchase of storm-damaged property may turn out to be a lucrative investment. A building can be purchased now at a reduced price, and repaired. Then, when the real estate market has recovered, that same building may be sold at a significant profit. This pattern has been demonstrated follow storms of this nature in many other parts of the coastal U.S.
If you are considering making a commercial property purchase in this time of financial recovery, make sure that your interests are protected. Along with a real estate broker to help you locate and choose your property, contact a real estate lawyer to help you navigate the sometimes-confusing paperwork. The Law Offices of David Witkon have considerable experience in commercial real estate transactions in both Nassau and Suffolk counties. Contact us today to schedule an appointment.