LA County Mask Mandate, Rising Coronavirus Cases Not Pushing CRE Off-Course
Los Angeles County is now logging more than 10,000 new coronavirus cases a week and a new mask mandate is in effect for everyone in indoor public spaces, regardless of vaccination status. But LA-area commercial real estate experts say so far these apparent regressions haven’t derailed any of their plans or negatively impacted the flow of people to retail or offices.
“People aren’t really changing direction right now. If they were in the middle of doing an acquisition or thinking about doing an acquisition, I don’t think this is giving them a lot of pause right now,” Banc of California President of Real Estate and Commercial Banking Hamid Hussain told Bisnow.
A lot has changed in a year and a half, Hussain said. The existence of the vaccine and its demonstrated ability to largely protect people from being severely affected by the coronavirus has given people hope they didn’t have in mid-2020, when the virus ground life to a halt on a national scale.
“It’s a little demoralizing, right? People thought they were done with the mask,” Belisle said. "[But,] it does not seem to be something that’s going to affect the momentum that’s picking up.”
Retail clients have told him they have some customers come in who grumble about having to wear a mask again, but continue to come in to shop or do business. Restaurant clients have reported the opposite of a drop-off since the mask mandate took effect Sunday morning.
“They said bookings are off the charts. They haven't seen any slowdown over the weekend, or any kind of change in velocity,” Belisle said.
NewMark Merrill Cos. President and CEO Sandy Sigal said his company’s shopping centers have not seen a drop in foot traffic since the return of the mask mandate and the uptick in coronavirus cases countywide, nor does he expect to see such a decline.
“People still want to go out, and if they are vaccinated, they feel safe doing so,” Sigal said.
Of new coronavirus cases in LA County over the past six months, 99.6% involved people who weren’t vaccinated, the Los Angeles Times reported.
At two LA County office buildings owned by Coretrust Capital Partners, Coretrust Capital Partners Managing Partner Thomas Ricci gets daily numbers from key card swipes and parking data about occupancy at the firm’s properties. Each day this week, they have hit a new high for tenants in the building since the start of the pandemic.
Coretrust has added a slew of upgrades to its properties in response to Covid, including bringing in three ultraviolet germicidal radiation robots per property that move through restrooms, conference rooms and other high-touch shared spaces in the building (and tenant suites, if they ask) and upgrading HVAC systems and air filtration. Coretrust has been diligent about communicating all this to tenants, and the tenants have been appreciative both of communication and their health and wellness efforts, Ricci said.
“We think that that messaging is paying off, we’re seeing the numbers of people coming back to the office going up daily,” Ricci said.
Occupancy at Coretrust’s property in Pasadena is about 35% of what it was averaging pre-pandemic, Ricci said. In Downtown, occupancy is around 20% of the pre-pandemic average at 444 South Flower.
Office occupancy in the LA metro area has generally been on the rise since late June, according to data from Kastle Systems, which makes touchless entry systems used in 2,600 buildings in 138 cities nationwide and does a weekly estimate of office occupancy.
Occupancy on June 23 was 27.1% in the LA metro. That rose to 28.4% on June 30. On July 7, it was down slightly to 27.2% — a dip observed in every major city Kastle monitors and that it attributed to the Fourth of July holiday — but it continued its upward trajectory on July 14, rising to 29.9%.
The county announced its mask mandate would return on July 15, and the mandate went into effect on July 17.
Sigal and Belisle noted that this is all still new and seems very much like a blip — likely part of the reason it isn’t having a major impact on behavior of office tenants, retail tenants and the general public, they said. If the situation persists, though, Hussain left the door open for a possible shift.
“If we go through the entire summer this way, if things get worse with the delta variant, that may cause additional changes for people that might be noticeable and impactful in the CRE space,” Hussain said.