April 7, 2020
The timely (and eerie) arrival of the 2020 Spring edition of the SIOR Report was published last week with the focus on fears and forecasts of the commercial real estate industry. In January, when I interviewed for the article, What’s Keeping Brokers Up At Night, I never thought we would be in the economic position that we are in as a nation—and certainly not this quickly. It seems my commentary will be put to the test in these coming months! The environment is changing so rapidly and it’s almost unfathomable that this pandemic has only been going on a few weeks. It feels like a lifetime.
While the effects to the retail environment were more immediate, the impact to office and industrial will be delayed. Construction will continue on many new buildings that had already been funded, materials already ordered, and pricing locked in with contractors. Much of the reaction from office and industrial Landlords – many of which have some of the lowest vacancy rates they have ever had – is yet to be seen. With the growth of the Triangle over the past decade, the region now has more institutional Landlords and REITs than ever before and they are not ones to make quick decisions or changes until they better understand the duration and severity of the event. While energy and hospitality are being greatly affected, the Triangle is fortunate to have so many companies in technology, life sciences, and professional services that will help lessen the overall impact to our local commercial real estate market.
As for commercial real estate firms, on a national level, the larger firms will be hit hard if this is a prolonged economic event. As I describe in the article, these companies have massive overhead and it will be a struggle for some to retain all of their salaried employees if there is a large impact on the transactional brokerage side of the industry. As for Rich Commercial, our firm has weathered many storms over our 30 years in business and this one will be no exception. Being highly specialized, we have always been strategic about how we structure our firm to get us through economic turbulence. We are here to serve our clients as challenges arise. May we all be reminded that this is just a moment in time and that together we will get through this.