Contact Us

CRE Leaders Say Depth Of Crisis Depends On How Long Construction Is Shut Down


How Seattle will weather the pandemic-induced economic storm is on the minds of real estate leaders across the Puget Sound area.

In Bisnow’s inaugural Seattle webinar, How The CRE Community Can Take On Coronavirus Safe And Strong, University of Washington Department of Real Estate Acting Chair H. Pike Oliver, Pine Street Group principal Matt Griffin and Wallace Properties founder and CEO Robert Wallace shared their predictions about how and when the city will emerge from the coronavirus pandemic.

From top left, clockwise, Wallace Property's Bob Wallace, UW Runstad Department of Real Estate's H. Pike Oliver, Cairncross & Hempelmann's Lindsey Plfugrath, who moderated, and Pine Street Group's Matt Griffin.

Though these CRE leaders worked in the industry during the eras of double-digit interest rates, the savings and loan crisis, the dot-com bust of the early 2000s and the Great Recession, none of those events compare with the swift blow that coronavirus delivered.

“The whole industry is in a quandary,” Wallace said.

He pointed out that if tenants don’t want to pay their rent they don’t have to. That, he said, puts the landlords in a tough position. Some tenants are opting to not pay even if they haven't been laid off in an attempt to save cash. 

Wallace predicts anything that is already under contract and funded will be finished, but after that, there will be a massive slowdown in terms of projects.

“Lenders will be shellshocked, which will have a palpable impact on construction and sales,” he said. “What will lenders be willing to loan? That depends on how long this lasts and how the deep the recession is that follows.”

Griffin concurred.

“This is really horrible,” he said. “We are fortunate to have great companies in this area that generate cash like Amazon, Microsoft and others. We are lucky to have that level of diversity that will help us come out of it."

Griffin predicts the value of some real estate will drop, but it is yet unknown who will be the winners and who will be the losers.

Oliver sees initial slowdowns, but reminded the audience that this is a learning opportunity. 

“Take notes,” he said. “Some firms had contingency plans. And we have one big risk factor in Seattle and that is that we are due for a major earthquake. Black swan events happen. You need to have some liquidity built into your business.”

Oliver also points out that this is the time when people will remember how you behaved.

“Once there’s room to make a judgment call, people will go to those who were gracious, rather than those that took advantage of the situation,” he said. 

Wallace agreed.

“For those who can, they should step up and do what they can for social services,” he said. “There are thousands of people in the community, like waitresses and waiters, who are flat out of money. Right now, philanthropy behooves us all.”