Real estate transactions such as leases and building sales have slowed but not halted in the wake of sweeping business closures due to the novel coronavirus, according to a commercial real estate expert.
Jon Rosenberg, designated broker and managing partner of Scottsdale-based LevRose Commercial Real Estate, said he has seen clients put lease discussions on hold as they wait for more market stability. However, pressing pause does not mean the deal goes away.
“Our conversations with landlords and sellers have been, the transaction is not necessarily dead, just postponed. Yes, there are some people who are going to push the pause button,” Rosenberg said.
On the flip side, if the client is a tenant looking for new space, they might not want to wait and risk losing the office or location they wanted, he said.
“If it’s still the opportunity you want as a buyer or tenant, this obviously isn’t going to go on forever,” Rosenberg said. “If this is something you’re going to want to continue, it might be wise to continue with closing. If you look at your business and you’ve gone through the loan process, it might be best to keep going forward.”
Rosenberg said the firm has been fielding questions from tenants that are struggling and landlords asking about best practices to deal with interruptions in rent payment and other changes. He is advising tenants to keep in touch with landlords about their situation and look at resources available, such as business interruption insurance and SBA loans. Landlords are handling changes often on a case-by-case basis to determine the best way to make their own loan payments while being compassionate to tenants.
Rosenberg said he doubts businesses that have instituted temporary work-from-home policies will be likely to do without office space after the pandemic is over. The virus also might spark new businesses to emerge and new industries to take shape, he said.
“Working remotely has been around for some time, but people like the physical interaction,” he said. “For certain businesses, they are making it work, but I know, for my team, they are looking forward to coming back and interacting with one another.”
The shift in business operation might also cause people who previously worked from home to decide they would like to get an office space after being stuck at home during quarantine, he said.
For LevRose, the company instituted a “no contact service” that allows for all the firm’s services to be done electronically, with no need to meet with people face-to-face, and allows the firm to continue to do its work.
“We are trying to make sure clients know we are still open for business, just electronically,” he said.
Source: Phoenix Business Journal