COVID-19 Trends of the Week: June 1-5

Tough month for CMBS. Pushback against eviction bans. Will office usage shrink or expand? These are the trends that shaped coronavirus coverage this week.

“An overblown, misguided notion.” That’s how, during NAREIT’s REIT Week, Boston Properties CEO Owen Thomas described the idea that office buildings will become less critical in light of health concerns over the indoor environment and the success of work-at-home endeavors. The jury is still out.

  1. Hotel and retail CMBS delinquencies mount.

CMBS delinquencies leapt 481 basis points in May, with CMBS 2.0 lodging and retail loans accounting for most of the issues. Delinquency rates in other categories, meanwhile, were fairly low. But a prolonged economic slowdown and the expiration of enhanced unemployment benefits and other federal economic assistance could reveal a more widespread decline later in the year.

Hotel, Retail Lead Late Loans—Will Other Assets Follow?
Commercial Property Executive

CMBS Delinquencies Jump in May
Commercial Property Executive

No More Mr. Nice Guy: Is Forbearance Fatigue Starting to Set In?
Commercial Observer

2. Will corporate tenants require more or less office space going forward?

Office usage is primed for a change, but what will the change be? A number of large corporations have declared that their workers will not be required to go back to dense workplaces, and the economy is expected to contract. That would indicate reduced consumption. But property owners are standing by the notion that workers want to return to in-person collaborations, and will need to spread out. That will result in more leasing, more new development and more retrofits. Time will tell.

Office Space Demand to Decrease, NAIOP Predicts
Commercial Property Executive

Silicon Valley Billionaire Eric Schmidt Predicts That Companies Will Need More Office Space After the Pandemic, Not Less
Business Insider

Corporate Office Space To Shrink in the Long Run Due to Multiple Pressures

The Worst Case Scenario for Real Estate Post-COVID-19

3. Landlords losing patience with eviction moratoriums.

Eviction moratoriums were extended this week in Seattle and Florida, while property owners in Boston and metro New York sued their governors over the continuation of such bans, calling them a taking of property. Many of the extensions, however, come with some changes that provide some relief to owners. In New York, for example, where the moratorium will continue until August 20, residents will now have to prove that they continue to suffer financial hardship. No such documentation was previously required.

‘I Have No Power’: The New York Renters Who Aren’t Protected From Eviction Curbed

Landlords Sue Over Eviction Moratoriums
Multi-Housing News

Inslee Extends Residential Eviction Moratorium Through Aug. 1 With Changes
The News Tribune