Snippets of the Impact of COVID-19 on Commercial Real Estate

Over the past week I have been on a number of commercial real estate podcasts and webinars, trying to learn what is happening and will happen to our commercial real estate market in the United States. Here are a few nuggets I have picked up.

One international real estate company interviewed a number of their top clients to find out the impact of COVID-19 on their leasing plans. 20% said they dropped deals in process, 20% said they were proceeding as usual with the deals in the pipeline, and 50-60% said their leases have been delayed or postponed.

In some cases, major tech companies that had large office lease expansions in the works that they were considering cancelling due to COVID-19 are now moving forward as a tool to reduce employee density and once the shelter in place is lifted to allow more distancing between employees.

Office markets with low vacancy may still experience high demand and continued low vacancy rates, while those with higher vacancy may see even more subdued demand and yet higher future vacancy.

There are global retailers competing for major warehouse space as the shift goes from China manufacturing to US manufacturing for certain products.

Commercial tenant rent relief should be collaborative, negotiate not litigate for many reasons including needs to be win-win for both tenant and landlord, and courts will be backed up for a long time and can be a most expensive route.

Most flexible co-working operations seeing demand virtually on hold, questions about high density work space with strangers and who was in this work space previously.

I’ve read recent articles about Singapore, where the malls are packed, worker are back taking public transportation and just about everyone is required to take their temperature twice a day.  The grocery stores have filled shelves, no one is hoarding, and life is getting back to normal.