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864 CRE Execs Told Us How The Coronavirus Will Impact The Industry. Here's What They Said.

The commercial real estate sector is increasingly worried the coronavirus will spark a recession, and some businesses are already being hit by the economic impact of the virus’ spread.

Bisnow surveyed 864 commercial real estate professionals to find out how the industry is responding to the coronavirus, which causes the disease COVID-19.

The majority of survey respondents, or 70%, said they were concerned that the coronavirus could affect the global markets and lead to a recession.


Coronavirus has been moving quickly, throwing the world off guard, and making impacts hard to track. Bisnow’s survey responses were collected between March 3 and 8, and as the coronavirus outbreak has developed, answers to those 22 questions may have shifted.

Stock market volatility, travel concerns, event cancellations and quarantine lockdowns in some countries have resulted in an uncertain global business environment, which is starting to trickle down into the commercial real estate sector.

Colliers International Senior Vice President Tom de Jong told Bisnow more CRE investors may hold off on major investment decisions.

“Two weeks ago, we were at all-time market highs, unemployment at all-time lows, everything was sailing along beautifully, and then this virus comes along and throws a monkey wrench in everything,” Jong said.

Last week, the Organization for Economic Co-operation and Development issued its interim outlook report, noting that output contractions in China were being felt around the world, and that global growth prospects remain uncertain. In the same week, the U.S. Federal Reserve lowered interest rates by half a percentage point to mitigate the anticipated economic effects stemming from the coronavirus.

“Nobody really knows the full extent of where we end up on the other side,” Jong said. “In the meantime, I think people are going to be very cautious in their decision-making processes and possibly put things on hold.”

Jong is based out of the Colliers International San Jose office in California, but works on national transactions for investment properties that are designed for self-storage assets.

If market uncertainty continues to delay business deals, that could lead to a recession — not directly because of the virus itself, but because people have decision-paralysis, he said.

Only 37% of survey respondents said the coronavirus had already impacted their business. However, nearly half of respondents, 47%, said there had been internal discussions at their company about how to prepare for the financial impacts of the coronavirus.

Similarly, about 45% of respondents said there had been discussions at their business about how to manage client expectations and ensure business stability if the coronavirus becomes more of an emergency in the markets they serve.


Disruption to business travel has already affected some CRE professionals. About 32% of respondents said they had changed travel plans as a result of recent news reports, while another 18% said they might cancel travel plans if the situation continues.

The reasons for canceling travel varied, with 32% of respondents indicating that their companies had restricted travel, while 26% said that an event or client meeting was canceled by somebody else. Twenty percent said they canceled plans because they were personally concerned about getting sick.

Jong had planned to attend the Self Storage Association Spring Conference next week in San Antonio, but said the conference was canceled because of coronavirus concerns.

“I have several listings that I was scheduled to pitch to potential investors at this conference, and obviously with the conference canceled, we need to figure out if we’re going to do face-to-face meetings, or if it’s going to be maybe a webinar — I don’t know yet,” Jong said.

At the corporate level, Jong said Colliers International restricted travel for employees. But at the local level, individual offices haven’t implemented strict policies around business activity or travel.

Eagle Development Group President Mike Ziegler said last week he attended the International Council of Shopping Centers Mid-Atlantic conference in D.C.’s National Harbor, which had strong attendance in line with past years.

“You saw a few people bumping knuckles or touching elbows as opposed to shaking hands, but a lot of it, quite honestly, I believe was followed by a laugh afterwards, so it looked like it was in jest, for the most part,” Ziegler said.

Great Falls, Virginia-based Eagle Development Group builds small retail centers in the Midwest and Southeast, typically adjacent to big-box or grocery-anchored retail centers.

Though Ziegler has registered for another ICSC regional conference in Charlotte, North Carolina, at the end of March, he has not made any travel preparations. Ziegler is also holding off on registering for the ICSC RECon event in Las Vegas in May, which typically draws tens of thousands of global attendees each year.

Based on Bisnow's survey, the CRE industry is split on whether it will restrict business travel in the future. About 29% of respondents said they hadn’t decided whether to reduce business travel until the spread of the coronavirus slows, while 25% said they would travel as usual. Only 10% said they would not travel until the coronavirus is contained.

The majority, 53% of respondents, said that a slowdown in business travel would not affect their deal flow or other metrics of success for their company. While 36% said the reduction of business travel could have a small effect on their business, 10% said the impact would be significant.


Ziegler anticipates that the disruption to daily workflow will be minimal to his business.

“We’re unique in many ways, in being a small business and being one with just a few people involved, in that we are very adept at working remotely already, and are used to doing most of our business via phone, email and laptop. The threat of the coronavirus hitting our particular business won’t disrupt us,” Ziegler said.

However, Ziegler has reached out to his insurance company to see how business interruption insurance will cover Eagle Development Group in the event that his retail tenants are affected by decreased business, and face difficulty in paying rent.

“We do feel that this is not a permanent situation, we have to manage our way through this much like we would if there was a small fire in a building or any other loss that occurred with damage to the property,” he said.

Circle Industrial principal and founder Patrick Maloney said that so far, the industrial real estate market has not seen any material disruption, but his company is monitoring the broader economic impact on customers and tenants.

“Industrial should be well-positioned, relative to other real estate assets. We are at the foundation of goods movement, which is relatively necessary. In some manner, higher use of e-commerce might benefit industrial,” Maloney said.

Los Angeles-based Circle Industrial has a strong presence in Southern California, as well as a broader portfolio of properties spanning from Texas to Delaware. Right now, the company is mostly working on standard improvements for vacancies and minor office modifications.

Maloney said that the company instituted an office rotation and work from home policy, but that there has not been a negative impact on the business.

“We are doing it as much for drill as due to any concern,” Maloney said.


The availability of construction materials is also expected to be affected. In the survey, 62% of respondents said that while they haven’t seen an increase in the cost of materials, they are expecting one. Another 21% said the disruption is already happening.

Half of the respondents said that the spread of the coronavirus would make construction materials more difficult to obtain, which in turn is expected to delay construction projects.

About 32% said they expect the coronavirus to impact their company’s typical supply chain, but that they would source materials elsewhere, and that there will be little disruption.

HST Construction Director of Operations Eric Brock said that at the moment, he has not seen an impact on business, with no issues affecting personnel or material deliveries.

The general contractor is based out of Bellevue, Washington, and focuses on commercial interior projects, including office, medical and retail spaces. Brock said the company is keeping an eye on the situation at large, and is making plans for how to deal with potential disruptions.

“At this point, it’s difficult to anticipate or have expectations for what the effects will be as the news changes daily. Because all of our projects are tenant improvements, our business is tied to the commercial real estate market in the Puget Sound,” Brock said. “As the COVID-19 outbreak affects the local economy, we will feel its impact.”

The coronavirus outbreak appears to have caught the industry off-guard. To this point, 54% of respondents said they didn't have a contingency plan.

Just shy of half, 49%, of respondents are not planning to spend money on additional resources to prepare for a coronavirus emergency. Only 19% said they are investing in additional resources, while 30% said they would consider it, if the situation continues.

Brock said the company’s contingency plans involved providing employees with technology to work and collaborate remotely.

Washington state has been one of the most afflicted regions for coronavirus in the U.S., with more than 140 cases reported as of Monday afternoon, ranking only behind New York.

Overall, the commercial real estate industry seems optimistic that any pain will dissipate quickly. In Bisnow’s survey, 44% of respondents said the effects of the coronavirus are short-term, and that the market will rebound quickly. About 22% said that the virus will have a lasting impact on smaller or weaker businesses, but will not have a long-term, broad economic impact.

While 20% said that the economy could see long-term supply chain changes, 10% of respondents said they consider the coronavirus to be a black swan event, which will cause a recession.

The majority of survey respondents were based in California (13%), Texas (11%), New York (9%), Georgia (7%) and Illinois (7%).

We will be using data from this survey to inform reporting over the next few weeks and even months. Stay tuned!