Real Estate Today: Questions & Lessons
By Mark Hulsey, Managing Broker
As I listen to the media and industry prognosticators, including those in real estate, clearly everyone is an expert at everything. For those of us who’ve been through many business & economic cycles, we can try to predict where things are headed from what history has taught us, the data we’re mining today, and our own unique professional expertise.
All real estate categories are expected to be impacted by our current global crisis. We’re certainly hopeful for a “V-shaped” recession as the economic optimists are predicting. But, there seems to be good reason to think we may be feeling some real estate pains for some time to come. Here’s why:
Questions Today
- How many employees who just lost their jobs or were furloughed will actually be brought back into the workforce quickly?
- How many retailers, restaurants & bars, or service businesses that closed down will open again?
- Will the short-term government’s relief truly save families from foreclosure and eviction?
- As people & companies get accustomed to working from home, will businesses need as much office space as pre-crisis?
- Will “small landlords” providing nearly half of all housing rental units in the U.S. be sustainable with extended loss of rents?
- How long will commercial landlords be willing to provide small businesses breaks in lease payments before it breaks them?
- Will banks be willing to truly provide loans real estate buyers? Or just say they will?
- Will commercial real estate be a big target for the circling vultures…again?
A lot of questions right now. Naturally, we’ll get to the other side of this crisis, but at what cost and what are we learning from this?
Today’s Lessons
Interesting the many lessons we’re learning both personally & professionally from this global pandemic. Lessons about our financial health and personal health – about our families, leadership, or personal discipline & character. It’s a long list of lessons but that’s where we’ll find our silver linings. Lessons in sustainability.
The world of real estate is gigantic. There will be some very hard-hit categories and for others, this will be but a blip in time. There will be no shortage of loan workouts and OREOs forthcoming. Reserves will be diminished and many companies will down-size even more as they must cut their expenses. There will be new opportunities that will arise from our situation today that we never saw coming.
Changes Coming
Facilities & property management will forever changed. Office floor plans will now have to accommodate social-distancing space. Investment business models will evolve for categories like Airbnb, co-working, and net-lease assets. Imagine the workload ahead for attorneys as they problem-solve lease amendments and new lease language to factor forced government shut-downs for businesses. It’s all new for us even with a lifetime in the real estate industry.
Rule #1
Most of us were taught as children the #1 rule when we’re faced with a big problem or life-threatening crisis. Do Not Panic. We must remain clear-minded to make life-saving decisions, right? Business and life go on. The fundamental lesson in all of this: Do not panic no matter how much the media and the rest of the world tries to convince you to live in fear. Fear only fosters more fear. It does not solve problems. Leaders solve problems. Leaders don’t panic.
Now, let’s get on with it and put the pieces back together again with genuine hope and optimism.
tags: commercial real estate, real estate, real estate investment, covid-19, office, retail, industrial, pandemic, crisis, economic development, recession, property management, landlord representation, landlord, tenant representation, tenant, rent, rental rates, finance, bank-owned, OREO, net lease investment, leasing,
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