NAIOP South Florida’s “Navigating the Market” virtual series has wrapped up a busy two weeks of well-attended discussions on issues of interest to the CRE community during the COVID-19 pandemic. Panelists discussed legal considerations for landlords and tenants, the economic outlook for the remainder of 2020, industrial real estate, capital market health, the future of South Florida office market design and coworking spaces, among other relevant topics to the industry right now. Most participants took a cautiously optimistic viewpoint for the industry’s near-term future.
Some key highlights from NAIOP South Florida’s most recent panels were:
A New Dawn: The Re-Awakening of Industrial After COVID-19
Stephanie Rodriguez of Duke Realty and NAIOP South Florida Chapter President, George Pino of State Street Reality, Tammy Tang of Colliers International China, Ben Genet of Genet Property Company and Christopher Thomson of Cushman & Wakefield weighed in on short- and long-term implications of COVID-19 on the industrial commercial real estate industry.
- Tammy Tang told NAIOP South Florida that China’s government has told banks that normal financing cannot by reduced during the COVID-19 recovery period and that CRE occupancy has already recovered there. Tang also noted that revenge spending is up among consumers
- Stephanie Rodriguez noted that she has switched from deal making to taking an asset management role, with projects slowing but not completely halting. She also expressed concern for the South Florida tourism industry, where fear of travelling could lead to a sustained negative market impact. Rodriguez also predicted that the demand for Class A space with additional parking infrastructure would go up as food and eCommerce deliveries continue to rise.
- George Pino said that there is high demand and many new opportunities to lease warehouses and industrial space as ecommerce skyrockets two to three years ahead of its forecasted growth cycle. The medical, food and household goods industries are on the market for immediate warehouse space, especially climate-controlled facilities. He also noted that more manufacturing is expected to be done in Mexico, the United States and Canada than ever before.
- According to Ben Genet, there is a lot more suffering going on at the small business end of the spectrum with more tenants simply choosing not to renew their leases.
Miami Market Update: The Pandemic’s Impact on Miami Office Demand & Design
Jon Blunk of Tower Commercial Real Estate, Brian Gale of Cushman & Wakefield, and Juan Ruiz of Blanca Commercial Real Estate discussed how Miami’s three main office markets are faring during the COVID-19 pandemic and what to expect in terms of office design and a market rebound.
- According to Jon Blunk, the biggest areas of concern as people go back to work will be the crowded elevators, building ventilation and air quality. He also noted that Miami is less dense than New York City or Chicago, and that this crisis might be the tipping point for businesses to decide to relocate to South Florida.
- Brian Gale was adamant that businesses will soon get back to a new type of normal, but as they do, their will have to be some rethinking of employee spacing. Gale also agreed that some Northeastern companies who have considered making a move to South Florida now seem ready to do so. He predicted that the quality of life, tax benefits and quicker returns to normalcy following the COVID-19 crisis would benefit the South Florida real estate market.
- Juan Ruiz noted that regularly scheduled janitorial services and state-of-the-art HVAC systems will be more important in lease renewals than traditional amenities like gyms and food trucks. He also suggested that low- and mid-rise suburban office buildings will fare well as tenants seek work environments without density issues.
Show me the money….and the discount deals.
Capital market and investment sale experts Pryse Elam of Foundry Commercial, Christian Lee of CBRE, Doug Mandel of Marcus & Millichap and Jason Hochman of Cushman & Wakefield discussed post-COVID-19 commercial real estate pricing, sale volumes and near-term outlook.
- Chris Lee predicted that in 2020 will see a very low investment sales market with very few properties that traded.
- All panelists agreed that there is still not enough data to accurately forecast the near-term economic outlook, but that with uncertainty in the market, many investors are taking a cautious approach.
- Doug Mandel was decisively positive about Florida’s real estate recovery, naming low supply, space limitations and relocating businesses’ attraction to the region as key factors. He said industrial and office sectors would not likely encounter much distress in 2020, also noting that there is now a higher demand for single-story suburban offices because of the COVID-19 crisis.
- Rates have not changed dramatically according to Jason Hochman. He said people have come into this recession low-leveraged, making refinancing still feasible today. However, he did predict that the retail and hospitality industries would continue to experience significant distress in 2020.