It is almost tourist season here in Wilmington, North Carolina. As the days become warmer, the beach, downtown, and local businesses become more crowded with tourists. Tourism brings money to our local economy, provides much-needed jobs and income for locals, and promotes our wonderful city. Plus, it impacts the commercial real estate industry more than you think. Continue reading to learn more about how tourism affects our industry!
Property Types
Tourists drive the types of properties that are in demand. For instance, an area with a large tourist population will have more hotels and resorts to match demand. The local hotel industry’s success is a key indicator of a region’s tourism. Hotel occupancy rates and revenue per room are often used to measure this. Similarly, tourist destinations often have more restaurants and retail spaces for entertaining visitors. So, areas with high tourism often have more hotels, restaurants, and retail spaces than other types of commercial real estate properties. A great example of this is Wrightsville Beach! You aren’t going to find many (or any) office spaces or industrial buildings on the island.
Investments
A great commercial real estate investment property is determined by a variety of factors, but tourism is one to consider. Tourism attracts more investors to a destination, which leads to high property values, increased competition for prime real estate locations, and more development.
Seasonality of Tourism
The seasonality of tourism can lead to fluctuations in demand for these properties. While tourism brings money to our local economy, it also increases the cost of commercial properties. With higher rents and mortgages, local businesses must find a way to stay afloat all year round. We saw how this affected many of our local businesses during the COVID-19 pandemic. Due to travel restrictions, businesses struggled to make ends meet without the usual influx of tourists.
Conclusion
Tourism is an essential driver of the commercial real estate industry. The demand created by tourists for hotels, restaurants, and retail spaces drives investment and creates new commercial real estate opportunities. However, the seasonality of tourism can pose challenges year-round. Nonetheless, we’re excited to have another summer filled with locals and tourists alike supporting local businesses.