My inbox is full! Today, I will parse through the noise and attempt to make some sense of the questions I receive on a daily basis. Plus purging is good. From cleared clutter to sanitized sanity — here it goes.
Does the presidential election slow commercial real estate activity?
Certainly, some small business owners take the political landscape into consideration before making a commitment to lease or purchase buildings.
Specifically, how does the current administration deal with ownership? Are there tax breaks if you occupy your business home? What about borrowing costs? The vast majority of commercial real estate financing is originated through loans either made or guaranteed by the Small Business Administration.
Frankly, in the year of the pandemic 2020 – most companies are concerned about their survival. What happens in November appears to be a distant outpost.
Will office space ever be used as it was pre-virus?
Prior to the lockdown — which sent workers scrambling home to find enough internet bandwidth and clear the guest bedroom — the trend in office space was toward more density. Meaning – doing away with fixed walls, creating a more collaborative work environment, fewer private offices and more employees per square foot.
Concepts such as WeWork – executive suites on steroids – became popular. For a small monthly fee, companies can pivot as their space needs morph. Add a few bodies? No problem. Lose a contract? Just downsize next month. The appeal of coding alongside several strangers advanced.
Now, decision-makers are re-imagining the way their spaces are occupied. Visit my office on a typical day and you’ll find four or five agents bouncing around a vacant suite. Many of us have found working from home advantageous, productive, and efficient.
Will I return to the office on a daily basis? Maybe. But taking a work break and watching “Frozen II” with our 2-year-old grandson has its advantages.
Is there a “virus discount”?
Simply: It depends. As aforementioned, office space is experiencing some uncertainty. Therefore, if you charge out into the leasing market, chances are you’ll find a deal. Retail? Who knows?
We are actually witnessing a virus premium in industrial real estate. Our vacancy was historically low at the beginning of 2020. Even the catastrophic nature of a COVID-19 pause has had little impact. I suspect the bump is largely due to cheap borrowing rates.
Are touring protocols in place – similar to residential?
Last week I read with great interest Leslie Eskildsen’s column on home-selling tactics. Outlined were the hoops required to simply walk through a house before buying it. Good grief!
No more open houses, safety gear, financial pre-qualifications prior to touring, handy wipes at the beckon and plenty of masks. Yet houses are leaving the market at a record pace!
We can still tour without much hassle. Sure, masks are required. In the case of a new build, plan on safety vests and hard hats. But, these are a good idea whenever walking a construction site. I showed up at a building in shorts a couple of weeks ago when the mercury surpassed my patience. You can imagine my embarrassment when my client perused the space alone. Long pants required. Whoops!
How is 2021 shaping up?
I’d only be guessing. However, I suspect the fourth quarter of this year will portend what’s next. If businesses reopen fully, a vaccine is discovered and most importantly, confidence returns, we could see a bounce back like no other.
Remember, not so long ago, folks were optimistic about a banner 2020. Man. That is SO 2019!
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at [email protected] or 714.564.7104.