COVID-19 Impact on the Commercial Real Estate Investment Market
The Corona Virus (COVID-19) has had an enormous impact on all of us. These are trying times and it is important that we support one another as much as possible as we navigate this unprecedented event. With that in mind I thought I would update you on what is happening in the Commercial Real Estate market.
Commercial real estate remains relatively attractive as interest rates have fallen to historic lows. With the uncertainty in the stock market and low yields on bonds, commercial real estate has become appealing to many investors for its stability.
Some categories of commercial properties will be negatively impacted by the downturn in the economy. Office properties with longer-term leases are well-positioned to withstand the downturn. The multi-family sector may experience an insignificant impact depending on the unemployment rate in the short-term, while the demand for affordable housing units will continue. Industrial properties may be adversely affected as a result of supply chain issues, but next day delivery warehousing/logistics (Amazon) will continue to grow. Hospitality and transportation assets are stressed due to travel restrictions and cancellations across all sectors of the economy.
Before COVID 19, retail was evolving from your traditional malls by repositioning themselves with a larger mix of entertainment, hospitality and other non traditional retail use. The negative impact on the retail sector will be determined by the persistence of COVID-19. The small retailers will be impacted the most and there will be limited backfill tenants for vacancies. Once the current situation has stabilized, the retail sector may receive a boost from investors due to the low interest rates.
Transactions that were in escrow during the past 30 days are closing, but a few have also been postponed. Much of the interest has been in single -tenant investment opportunities such as Starbucks, drugstores and others. It is not business as usual, but we continue to service our clients and address their needs. We are reimagining the way we do business as we adhere to the health guidelines, directives, laws and Executive Orders from the Governor surrounding COVID-19. Please do not hesitate to contact us with any inquiries, questions or concerns that you may have. We will do everything in our power to get you safely into buildings that you may be interested in, as well as any other needs you may have.
We wish you and your families all the best in the coming weeks and months ahead. I will remain in touch and update you as things progress.
Barton K. Feinberg
Director of Brokerage, Associate Broker