These past few months have been trying for the commercial real estate industry, and it is obvious that the Commercial Real Estate Industry Must Do More than Merely Adapt to Coronavirus. COVID-19 has changed behaviors in many ways in the market. Some of these changes have been the implementation of extended business closures, beginning of remote work, and limited travel. Consumers are choosing to shop online, rather than in-person. All these changes have had impacts on Philadelphia investment properties.
The longer the pandemic wears on, the more difficult planning has become. Mallin says, “until we have a vaccine and are able to gauge effectiveness, it is obviously very difficult to plan and manage expectations. Anecdotal evidence points to a strong desire for office tenants getting back to their offices as soon as they feel safe, so they are able to take advantage of all the great restaurant and retail offerings in Center City Philadelphia.”
SHIFTS IN THE MARKETPLACE
Real estate investors are already taking action to deal with the rapidly occurring shifts in the marketplace. On the forefront, many investors have been making decisions that protect the interests of their employees and tenants. In Philadelphia, luckily, Mallin has only seen a small increase in multi-family vacancy and professional office vacancy.
As the pandemic rages on, real estate investors are adjusting their strategy in many ways, including optimizing cash management, making more informed decisions, and seeking to provide a better tenant experience.
According to Mallin, “we have seen an increase in the purchase of development sites by those looking to deliver product one and a half to two years after they believe the market has stabilized.” Mallin also alludes to confidence in continuous low interest rates, which is encouraging developers to be aggressive even though equity requirements have increased.
NEW OPPORTUNITIES FOR PHILADELPHIA DEVELOPMENT PROPERTIES
This unprecedented pandemic will likely have long-term shifts in the marketplace; however, not all the changes that arise are likely to be detrimental to investors.
Nadel weighs in, saying, “We are in the problem-solving business, and any time a problem arises, so does an opportunity. One opportunity we see is the repurposing of vacant retail spaces both in urban street settings and large shopping centers and malls. MPN has been brokering adaptive reuse development deals for 28 years, it is one of our areas of expertise.”