Commercial real estate investors are raising funds to acquire distressed assets, but they face uncertainty about how Covid-19 will affect the retail, office and hospitality sectors, said Doug Greenspan, a managing director at A&G Real Estate Partners, during a recent Turnaround Management Association webinar. “If you look at office, it does appear that we may see major shifts in how the labor force works,” he said. “One scenario is that many people will go into the office for just a couple of days a week. Even if that’s just 10 or 15 percent of workers, you’re talking about far-reaching effects on the demand for space and, in turn, the value of office assets.” The webinar, which was sponsored by TMA’s Central Texas chapter, focused on the effects of Covid-19 on real estate. Greenspan, whose firm is providing real estate services and advice to the likes of DSW, Ruth’s Chris, IT’S SUGAR, and Cinépolis, talked at length about retail. “Underlying issues that were visible in retail pre-Covid really came to a head with the onset of the pandemic,” he told the audience. “Retailers that were on everyone’s watchlist have since filed for bankruptcy. Our own Chapter 11 client list now includes, among others, GNC, Pier 1, Ascena Retail Group, Tailored Brands, Tuesday Morning, Modell’s, Stage Stores and Nieman Marcus.” Before the pandemic, the growth of Internet shopping and declining foot traffic at malls and stores had already affected sales-per-square-foot productivity, even in historically strong retail markets, Greenspan said. “In the fall of 2019, we were seeing retail rents decline in just about every submarket in New York City.” Click to read more at www.abladvisor.com.
According to Global Workplace Analytics, a research-based consulting organization specializing in telework, a recent survey shows that we will see 25-30% of the workforce working at home on a multiple-days-a-week basis by the end of 2021. Commercial real estate expert Stephen LaMure, owner of Dominus Commercial, said how the industry reacts to the pandemic should really be broken down into three major parts: office buildings, industrial and retail. All three are experiencing some major changes, both in good and potentially bad ways. “Right now, it’s a little bit of a wait and see. Especially with this uptick in COVID-19 cases,” said LaMure. He works in Dallas’ design district and believes only 20 percent have come back to their offices in his area. He said overall, the pandemic has really caused companies to rethink whether they want to permanently work from home or alter their office space. “Most of them said they needed to redesign their space to be able to spread out,” he said. “A big part of our business is talking to companies about their values and their purpose and what their culture is. How do you get a space and work environment that supports that or projects that?” In the last few months, some companies like Twitter and Square have already made the call to let some employees stay at home for good. Click to read more at www.nbcdfw.com.
American cities face an increasingly uncertain future in what is already an uncertain time for when and how to reopen businesses and public spaces during the coronavirus outbreak. Elevated concerns over density and a shift in the mindset about remote work underscore the need to assess what matters most to urban residents. Measuring the value of urban amenities such as arts, cultural activities, recreation opportunities, and overall quality of life and how they relate to a neighborhood’s perception and satisfaction is more important than ever as cities look for a way forward in the post-pandemic future. A landmark Urban Institute report, commissioned by the Knight Foundation, surveyed 11,000 residents across 26 metro areas before the national coronavirus shutdown to understand what determines residents’ sense of attachment and connection to their city or community. It examines the trade-offs people make and the role they think amenities play in their satisfaction of locations. Click to read more at www.forbes.com.
The Texas economy gained 250,900 nonagricultural jobs from March 2019 to March 2020, an annual growth rate of 2 percent, higher than the nation’s employment growth rate of 1 percent (Table 1 and Figure 1). The nongovernment sector added 216,200 jobs, an annual growth rate of 2 percent, also more than the nation’s employment growth rate of 1 percent in the private sector. Click to read more at www.recenter.tamu.edu.
The impact of new development and of the ongoing operations of existing commercial real estate buildings in the United States – office, industrial, warehouse and retail – has grown to support 9.2 million American jobs and contribute $1.14 trillion to the U.S. GDP in 2019, an increase from 8.3 million jobs and a contribution of $1.0 trillion to GDP in 2018. Based on the existing stock of commercial buildings — totaling 49.6 billion square feet at the end of the third quarter of 2019 — direct spending on building operations totaled an estimated $173.0 billion and contributed $464.0 billion to GDP. In addition, 563.3 million square feet of new office, industrial, warehouse and retail space newly constructed in 2019 has the capacity to house 1.4 million new workers with a total estimated annual payroll of $83.5 billion. The findings were presented in the annual study, “Economic Impacts of Commercial Real Estate, 2020 U.S. Edition,” released this week by the NAIOP Research Foundation. The study measures the contributions to GDP, salaries and wages generated, and jobs created and supported from the development and operations of commercial real estate. The study broke out several key measures by commercial real estate industry sector: Click to read more at www.naiop.org.
Houston’s 2020 commercial real estate market outlook is positive with a few challenges in the office sector. The metro’s economy continues to recover from a lackluster energy market amid a general slowdown of global trading; nonetheless, job growth should remain positive through 2020.
Despite global trade stagnation, Port Houston, a major economic driver,
reports increasing volume and value, which should carry over into 2020 to remain among the top ports in foreign and domestic tonnage. Click to read more at www.rednews.com.