Retail

by Shelly Branscom, CCIM 

As we began the 2020 year, none of us could have predicted the halting effects COVID-19 would have on the world’s social and economic landscape.   As current stay-at-home orders are shifted into economic phasing plans, it is important to take a closer look at what major factors will impact the Commercial Real Estate Market in 2020.

Return to business – communities will begin re-opening businesses; albeit with procedures, including wearing masks, social spacing and extra cleaning in place

Downturn – We are experiencing a downturn in CRE activity caused both by social distancing and by small business owners’ need to furlough and/or layoff significant portions of their workforce.

Recession – Remember recessions do not typically occur until 18 months after they’re seen. In other words, the economy is not falling apart. Trust me, in about 18 months, we will all be back to “normal.”

Owner/User Opportunities – Every downturn creates real estate transactions; subleases, Tenant relocations, foreclosures and dispositions. Be ready to buy!

Cash Flow – Landlords should review their rent rolls and develop a strategy to maintain cash flow even through Tenant requests for rent forgiveness, reduction or abatement. Consider trimming expenses wherever possible to minimize asset devaluation.

Banker Conversations – Property owners should be in contact with their lenders. Keeping the lines of communication open during the COVID-19 cycle will enhance your ability to negotiate forbearance options should you not be able to make your payment.

Refinance – Investors who are seeking to hold their assets should consider refinancing during this low-interest-rate environment. At the very least, talk to your lender.  There are more options available to you now than ever before.  Refinance/consolidate into non-recourse loans.

Capital Improvements – If you are experiencing flush cash flow, now is the time to invest in capital improvements.

Investor Opportunities – Some investors may want to move off the coasts and into the south-central United States to take advantage of more favorable capitalization rates; jump on these opportunities.

Technology – Expect mergers and acquisitions around the world, particularly in the tech sector.

Social gatherings – The methods of attending sporting events, shopping and even dining will shift and will likely include occupancy loads at unprecedented low percentages. Our family gatherings, elderly visits and birthday celebrations will look different as well.

Local Impact – Find comforting in knowing, New Mexico, and Albuquerque in particular, often do not fall as low or peak as high as other states and cities across the United States. We are cushioned by the federal government’s impact on our State via the National Laboratories and our three Air Force Bases.  In addition, we do not have nearly the amount of speculative construction in our community as other communities do, resulting in less of an increase in vacancy.

We will Recover – Finally, a survey of women who sit on boards of directors found that most believe it will take six months or more to recover from the effects of COVID-19 coronavirus pandemic; however, we will recover. Call me and I can help you navigate your way through the next six months and beyond.

Our industry is very much alive and I believe opportunity still awaits.  We must be patient, resourceful and smart in our approach to commercial real estate during these times.  Contact me today and let me help you navigate your way through the next six months and beyond.  Your success is my mission!

Shelly Branscom, CCIM is an NAI Maestas & Ward commercial real estate specialist that provides substantial long term strategies and business planning services to her clients.  She prides herself on thinking outside the box, enabling her to contribute unique solutions and outcomes specific to each of her clients.  Learn more about Shelly and her listings.   

NAI Maestas & Ward is a full-service commercial real estate company serving New Mexico since 1996. The company is a dynamic commercial real estate firm offering best-in-class real estate services in brokerage, property management, asset management, business brokerage and development services.

 

 A Whitepaper by Riley Mckee

Between 2007 and 2009, the commercial real estate industry was dealt a heavy blow by what is now referred to as “The Great Recession”. Property values and sale volumes collapsed when businesses began prioritizing survival overgrowth. In the years that followed, real estate transactions required extreme deference on the part of sellers, as buyers capitalized on this dramatic shift in economic circumstances.

In the last few years though, the market had notably improved in response to steady economic gains and a corresponding growth in demand—demand that seemed unassailable until just over two weeks ago.

The unexpected surge of COVID-19 and the drastic measures put in place to slow it have undoubtedly shaken things up. Shelter in place orders, strict limits on public gatherings, forced closures to restaurants, movie theaters, and other businesses deemed “non-essential” have limited productivity and stunted activity market-wide. Uncertainty and concern abound as we grapple with finding and implementing effective solutions.

Yet in the midst of these unsettling times, it’s vital we recognize the “black swan” nature of a pandemic. The roots of our current predicament bear little resemblance to those of the economic collapse in 2007, which was caused by structural deficiencies in the financial system. COVID-19 aside, our economy is healthy: steady and sustainable growth had resulted in low unemployment, high consumer confidence, and a sense of optimism about New Mexico’s future that had been lacking for some time. While these very recent circumstances may change in the short term, an energetic recovery once the virus is contained is by no means out of the question.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act recently passed by Congress and signed into law by President Trump on Saturday (March 28) is a noteworthy step in that direction. The bill provides a healthy measure of relief to businesses and individuals alike, buying time to flatten the curve while keeping our nation’s powerful economic engine primed for a quick restart. Similarly, governmental agencies in New Mexico have made a slew of resources available to help businesses weather the storm.

To our clients, we advocate taking full advantage of these resources to help stabilize operations and lay the groundwork for a return to normal economic circumstances. Coronavirus, just like the Great Recession, will one day be relegated to the status of a bad memory. Until then, let’s remain patient and persevere toward the prosperous future we know is on the horizon.

For more information on resources made available through the CARES Act or from The State of New Mexico please reach out to Riley McKee and Alex Pulliam

To download this Whitepaper, click here

Riley McKee is an NAI Maestas & Ward commercial real estate specialist that advises industrial and logistics real estate owners and occupiers on leasing, acquisitions, and dispositions.  Learn more about Riley, his properties and his insights to market shifts in commercial real estate here. 

NAI Maestas & Ward is a full-service commercial real estate company serving New Mexico since 1996. The company is a dynamic commercial real estate firm offering best-in-class real estate services in brokerage, property management, asset management, business brokerage and development services.