On April 23rd, CrowdStreet’s Ian Formigle was joined by Melissa Reagen of Nuveen Real Estate to discuss how commercial real estate is reacting to COVID-19 and what investors should consider about potential investment opportunities in the future. Moderated by Peter Grant of The Wall Street Journal, Ian and Melissa discussed:
- April rent collection rates: Nationally, 89% of apartment rents were collected but landlords only collected 20-30% rent from retail tenants.
- How lenders are currently willing to install 90-120 day payment holidays, but will they be patient enough to extend those holidays? And for how long?
- How sunbelt cities like Austin and Raleigh are likely the best positioned to recover first, while other metros like New Orleans and Las Vegas will likely lag behind.
- Which asset classes have been hit hardest–retail and senior housing, for instance–and what that means for investors going forward.
As both Ian and Melissa pointed out, different metros and different asset classes will bounce back at different times, but Melissa added that we simply don’t have the data yet to say what will happen in the rest of 2020 and into 2021. Will urban apartment dwellers flee to more suburban living spaces like Build-to-Rent communities? Will companies keep some portion of their staff operating remotely? And how long will it take for hotels to recover from occupancy rates as low as 10%?
Peter echoed her sentiment, explaining that while historically it’s been possible for people to make a lot of money in downturns, we’ve never seen anything quite like this–it’s more than the real estate cycle, it’s more than just a down economy. COVID-19 is having such a broad impact on our lives that it’s almost impossible to predict what will happen.
So when it comes to investing in a post-COVID-19 economy, Ian ended the live stream with this thought, “Regardless of whether this recession is V-shaped, U-shaped, or a swoosh, all we can do is look at each individual opportunity and see if there is a compelling factor that makes that deal make sense right now.”