Commercial and residential real estate have never experienced a seismic shift as large and pervasive as the one brought about by the COVID-19 pandemic.
Construction, by and large, stopped. There were concerns of skilled trades workers going to other states that allowed construction for work, prompting concerns about a spike in building costs. Nonessential workers were told to stay home, leaving buildings large and small virtually empty. Evictions were halted in an effort to keep people in their homes. Malls shuttered. Businesses of all stripes, and residents, couldn't (or wouldn't) pay their landlords. Some sued those commercial tenants for unpaid rent. Building material supply chains were disrupted. With travel restrictions in place and business gatherings limited or canceled, hotels fell behind on their debts.
And that was just the beginning.
But some of the major concerns in the industry didn't come to pass. For example, the fear that apartment owners would face a crush of non-paying renters was largely curtailed because of enhanced federal unemployment benefits that gave those out of work an additional $600 per week, affording them the ability to make their monthly payments. The housing market has shown signs that it's rebounding after record-setting lows in sales as economic uncertainty and stay-at-home orders slowed the sales industry to a near halt.
What we've learned: As the virus spread, the industry adapted. When construction workers were allowed broadly to return to work starting in May, the industry — already used to wearing protective equipment — added masks to their required gear and resumed building projects. Brokers and Realtors did virtual or contactless tours of buildings and homes. Businesses reconfigured their spaces to allow for more distancing and increased cleaning and sanitation. Some staggered their workforce to come in only certain days of the week. Landlords, in some instances, offered tenants rent forgiveness, while others held firm and took them to court.
Unanswered questions: The precise effect on office space remains unknown. Some tenants may continue allowing their employees to work from home, which would free them up to shrink their footprints. But precisely how deep that space contraction is is up for debate.
Currently the region has about 81 million square feet of office space, according to a second-quarter report from the Detroit office of London-based brokerage firm Savills plc. The vacancy rate was 20.8 percent, down from 21.3 percent in the second quarter last year.
"I think it's going to shrink the potential office requirements long term because of the work from home aspect," said Paul Choukourian, managing director in the Southfield office of brokerage firm Colliers International Inc. "Short of that, there are a lot of unanswered questions. I don't think anyone expected it to go on as long as it's gone."
Likewise, retail landlords may end up in the same boat. COVID-19 crippled many retailers, both small family-owned businesses as well as national and international stores. The impact on those building owners will play out in the weeks and months to come, and opportunistic buyers of real estate in both the retail and office sectors will swoop in to buy up distressed assets.
What's next: Some are anticipating a wave of tenants downsizing their office footprints when leases come up for renewal.
Peter McGrath, associate director in the local Savills office, said all companies are going to review their footprints and evaluate their space needs moving forward.
"There is some consensus that many users simply won't need as much space due to more employees working remotely, and doing so more often," he said. "The other side of the coin is office users with dense office environments — say one employee per 100 square feet — could actually need a larger footprint to create a safe and inviting workplace for their employees."
"The problem is going to come as these leases start to roll and almost every company is going to go through a diagnostic of their space, and I think long term it's about how do we downsize because we learned that 25 to 30 percent of our employees can work from home," said Brian Piergentili, executive director in the Southfield office of Cushman & Wakefield, a Chicago-based brokerage house.
"I think there will be significant downsizing. I hope I'm wrong."
"come" - Google News
August 09, 2020 at 11:04AM
https://ift.tt/2CgTEtq
What's Next: In real estate, worst fears haven't come to pass — so far - Crain's Detroit Business
"come" - Google News
https://ift.tt/2S8UtrZ
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "What's Next: In real estate, worst fears haven't come to pass — so far - Crain's Detroit Business"
Post a Comment