Hansen Matthews, partner with Maus, Warwick, Matthews & Co., joined the Greater Wilmington Business Journal and Paul Loukas, broker at Cape Fear Commercial, to discuss the impacts of the coronavirus on commercial real estate in Wilmington, NC. While this pandemic has brought a lot of change to our everyday life, here is how it has affected the commercial real estate industry.
With business being much slower than normal for most commercial businesses, many wonder if this impacts tenants ability to pay their monthly rent. Hansen Matthews informed us that fortunately, most tenants are paying their rent as scheduled. Most of the effects of this downturn are business to business, and with the economy booming back in February, many tenants have had the ability to save up enough money to carry them through this time.
The effects on small businesses vs. big businesses vary. Restaurants and retail are getting hit harder than others, and some places will be affected by the loss of foot traffic in the area. All tenants are valuable to their respective area, adding variety to the tenant mix and providing a pleasurable experience for customers. We do not see many tenants struggling with rent payments, though, and are looking forward to them reopening and booming again soon.
While some landlords might be pressed to forego rent collection during this time, it is not quite that easy. Landlords have obligations of their own and must handle deals with the bank, insurance companies and operating expenses, in order to keep things up and running for everyone. Unfortunately, it is not possible for them to not collect rent. Fortunately, a lot of landlords are working with their tenants on a case-by-case basis and getting creative in ways to make it work for them. We have seen a tremendous effort on everyone’s part to work together and support one another.
While it might be surprising to some, yes, people are still on the search for commercial real estate! The pace of new inquiries has slowed slightly, but those searches that are in progress are still continuing as planned, it depends on the buyer and the situation. For example, buyers such as residential developers are still continuing as planned, as much of this will be over with by the time they are ready to start construction. On the other hand, someone looking for office space whose business has been hit, might slow the tempo of their search slightly just because of the uncertainty right now.
Of course, no one wants a recession, but if it had to happen, now is actually a good time. Occupancy has been at a historic high, with little to no vacancy for certain properties in the area. We might see the market pull back to a normal level of vacancy and opportunity after this.
We are in unforeseen times that no one was expecting. We have been pleased to see everyone working together and supporting one another through this process. We encourage everyone during the next couple weeks or months to continue to work together and maintain the good will we have seen thus far.
If you are looking for commercial property, our team is here to help you find the right property even in these uncertain times. Contact us today.