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Crisis Update – “Musings from the Couch”

Quick view from the couch (literally!)…Based on a whole bunch of calls and conversations this week with many people who are a lot smarter than me!

Wow, what a difference three weeks makes.  What the heck happened??!!  Here’s a mixture of what we have learned in the last few weeks…

  • Observations:
    • Ask me in an hour! Never seen such a rapidly changing market…although starting to settle a little bit.
    • Predictions? Yea, right.  My opinion…no worthwhile opinions until we can get a remedy to the virus, a vaccine, or a vision of when everyone can leave their home.
    • ONE thing we’ve learned? All companies and institutions who can, NEED to be able to IMMEDIATELY “flip the switch” from “bricks & mortar” operations to online.
    • Trying to do a deal? You like the game of dominos?  Well, then you’ll love this!
      • Deals that survive will need extensions.
      • Need a town approval…not so fast.
      • Need a town permit…not so fast.
      • Need a public hearing…not so fast (and, if online, will it be legal?)
      • Need a mortgage approval…not horrible…but not fast!
      • Designer, architect, etc. needed… not horrible…but not fast!
      • Need an appraisal or inspection…actually, decent turnaround.
    • It’s the law!
      • Time to change antiquated laws that prevent online services.
      • Thought you knew what your lease said…think again!
        • Force Majeure!
    • You’re not covered!
      • Time to change insurance company rules that don’t give coverage for things like online consultation!
      • Business Interruption. Most people have no idea if they are covered.
    • It’s not the building!! Please, tell me why our public institutions (Town Halls, Schools, etc.) are thought of as brick buildings? They are institutions…NOT buildings! Still FAR too many services not available (or allowed) online!
  • Retail:
    • Serious stuff! Hardest hit of all sectors…including Hospitality.
    • Real questions…Who makes rent payments in April…who survives…how long will it take the survivor to recover?
      • Looking like landlords are working with tenants for reasonable, short-term solutions. Deferred payments.
    • Then what? If the rent payments aren’t made…what about the landlord’s mortgage?
      • Looking like most lenders are working with their borrowers for solutions.
      • Deferred payments…making it up on the backend.
    • Ouch! Rumors in some markets of 25%-50% survival rates.
  • Multi-Family:
    • Keep it going! Construction on new projects still happening. Albeit at a slower pace!
    • Get the three-D Goggles! Virtual tours for prospective tenants.
    • Expecting tenant defaults.
      • Halts on evictions
      • No rent increases for 90 days
      • Payment plans for those who have been laid off.
  •  Office:
    • The lights are on…kind of! Most office buildings 100% vacant or greatly reduced due to “stay at home” orders.
    • Hit the remote: Amazing how many companies or functions within companies aren’t (or weren’t) set to operate remotely.
    • Homework!
      • You thought you liked working from home…just how much?
      • You like hanging out with your kids and your spouse…probably not 24/7!!
      • Don’t talk to me! Turns out we DO like human interaction (at least a little bit!)
      • Questions abound re: the future of working from home. The crisis WILL change the office market landscape in the future!  Just not sure for better or worse.
    • Lease transaction volume?
      • Predominately slowed or on hold.
      • Deals with deadlines moving forward but slowly…
      • Lease renewal appears to be moving forward.
  • Industrial:
    • Think “toilet paper”! If you didn’t know what supply chain was then…you sure as heck know now!
      • How do we get the parts to make the product?
      • How do we get the product from the plant to the consumer?
      • Kimberly Clark says they have enough toilet paper. Problem is it isn’t on the shelf…Which is all you care about!
      • Supply chain starting to balance.
    • Winners:
      • E-Commerce (good for us)
      • Food products (good for us)
      • Grocery Stores (good for us)
      • Internet Communications (good for us)
    • Losers:
      • Aerospace/Airlines (not good for us)
      • Automotive (not so good for us)
      • Gambling industry (not good for us)
      • Oil & Gas


Hope you’ve enjoyed the update!

Keep smiling (stay positive!)!


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