In a typical economic cycle – and even crisis – commercial real estate lags the broader U.S. economy by about six months.1 This crisis is different. The COVID-19 commercial real estate impact was immediate.
Healthcare, malls, hospitality and student housing sectors experienced significant disruption right away, while data centers, industrial warehouses and storage facilities faced less of a decline. For all real estate owners and operators, the immediate impact of COVID-19 is not likely to retreat any time soon.
While the full economic impact on domestic real estate has yet to be seen, what is clear is that commercial real estate owners and operators will have to do more than just adapt to the new COVID-19 commercial real estate world – they’ve got to embrace it.
Here are five ways properties in this new era of COVID-19 commercial real estate have pivoted to maintain their market share or simply survive until the next horizon appears.
- Optimize operational costs. Many hospitality and retail properties have temporarily closed their doors to both reduce the spread of the virus and minimize operational expenses like utilities while occupants are not in the building. Even as tenants return to work, consider portioning off parts of the building or closing amenity spaces and cancelling non-essential property maintenance.
- Reconsider rental agreements. Because most tenants are short on cash right now, landlords are looking for ways to adjust rent in good faith while still maintaining revenue. Consider renegotiating some of the following aspects of the tenant contracting, including eliminating parking fees, rent abatements and extend leases in exchange for rent reduction.
- Adapt properties. Many businesses were able to pivot to another line of work completely. Others added to or diversified their portfolio. Conference centers have been commissioned as alternative care facilities, while hotels have converted to quarantine housing.
- Upgrade and leverage technology. Take advantage of technology to host virtual open houses for your facility, and otherwise personalize sales in a way you’d never otherwise be able to. Install an access system that allows occupants touch-free access to their space and common areas. This will also position your facility ahead of the curve post-crisis.
- Focus on the tenant experience. Differentiate your property by installing new systems to enhance the tenant experience. Consider software with data analytics that translates directly into building metrics. Display these metrics on a board at the facility’s entrance for all occupants to see.
COVID-19 commercial real estate realities
While COVID-19 has ushered in some significant challenges for the real estate industry, it’s also important to consider the ways in which you can adapt with your facility both during the pandemic – and while looking ahead to the future.
For more information on how to optimize your real estate portfolio during a pandemic, contact your HUB Real Estate expert.