Commercial real estate leader Steve Schwab is looking to sign tenants to leases at a new development in downtown Denver but he’s running into troubles linked to the pandemic.
“COVID has a had a major effect, probably the most major effect in the sales business,” he said.
Schwab, a managing principal at Cushman & Wakefield, says COVID-19 has had a major impact on commercial real estate in a short amount of time.
“Between the first quarter and the second quarter, we saw office investments sales decrease by about 72%,” he said.
Schwab says unemployment, more people working from home and social distancing are impacting commercial real estate sectors like shopping centers, hotels, retail and office spaces.
He says that the road to recovery will be very challenging, something other industry experts agree with.
“The restaurants, the gyms, the bowling alleys, those are going to struggle over the next 12-18 months until we get back to full physical occupancy,” said Spencer Levy, chairman at CBRE.
Levy says high inventory combined with low interest rates could attract foreign investors to American commercial real estate, something he welcomes with open arms.
“Foreign money isn’t just cash. It brings everything with it. It brings jobs, it brings foreign students, it brings people that buy retail,” he said.
But will foreign investment bring more people back inside massive buildings?
Levy compares what today's commercial real estate industry needs to rebound to that of 9/11.
“We had a period of time where people were tragically afraid to be back in the cities, afraid to go back into tall buildings. But that passed after people had better security in those buildings,” he said. “We are going to see exactly the same thing today from a wellness prospective.”
With many major retailers already moving out of brick and mortar buildings, and millions of square feet available across the country, Levy says the commercial real estate industry needs more government assistance on the road to recovery.