CPE’s June 2020 Must-Reads

Catch up on our most important stories, interviews, rankings and analysis from last month.

As industries grapple with the prospect of a deep and prolonged downturn, COVID-19 continued to be on everyone’s minds last month. June debuted with what seemed like a breath of fresh air in this ongoing multi-front crisis, as respondents to the SIOR’s Snapshot Sentiment Survey highlighted growing optimism about the health of commercial real estate markets. However, by the end of the month, it was clear that, under the current circumstances, optimism couldn’t last long. The second-quarter USG Corporation + U.S. Chamber of Commerce Commercial Construction Index showed that confidence in new business and revenue expectations plummeted 26 points between the first and the second quarter. And as The American Institute of Architects’ monthly Architecture Billings Index indicated, development activity is likely to continue to lag as a result of the pandemic.

While the previous months we zeroed in on the pandemic’s impact on the hospitality industry, this month we paid close attention to the office sector. According to NAIOP, the U.S. office market is expected to witness net negative absorption for the next four quarters. Additionally, the association has issued a guide to help building owners and employers ensure a safe return of staff to the workplace. What’s more, a new Deloitte study showed that financial services institutions are not only considering when and how to facilitate reopenings, but whether to return to a full on-site staff at all. And as some office workers are returning to their workplaces, occupancy vacancies differ dramatically among major metros.

Retail was another sector on our radar in June, as Simon Property decided to scrap its $3.6 billion merger agreement with rival Taubman Centers Inc., citing the impact of the pandemic on Taubman and claiming the REIT breached its agreement. However, retail real estate experts speculate that the announcement may be a tactical move. We also sat down with Pacific Retail Capital Partners’ Najla Kayyem to discuss how retail property managers should prepare for the post-pandemic world. And in an interview with MG2’s Melissa Gonzalez and MJ Munsell, we looked at how design might come to retail’s rescue during these challenging times.

Meanwhile, transaction activity picked up last month, with a series of big-dollar transactions including Equinix’s plan to expand its Canadian operations with the $750 million acquisition of more than 30 facilities. In more international news, Allianz Real Estate has grown its Italian portfolio with the acquisition of a Rome prime office asset for some $225 million. Back in the U.S., Crow Holdings has sold a new 925,000-square-foot facility in Franklin Township for $164 million. And in Queens, GLP has paid Sitex Group $112 million for three industrial buildings totaling 235,500 square feet.

Here are CPE’s must-reads for last month:

CPE’s Coronavirus Coverage

Check out our latest news updates, features and expert advice on the coronavirus outbreak and its effects on commercial real estate.

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Counselors Reveal CRE’s Top 10 Issues for 2020-21

COVID-19 replaces infrastructure as the No. 1 topic in The Counselors of Real Estate’s annual survey.

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Looking Ahead: What’s in Store for CRE?

KPMG’s Phil Marra takes stock of the pandemic’s impact and assesses the role of data and analytics in the recovery ahead.

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Top 5 Markets for Office Construction Activity

Here’s a breakdown of the nation’s best-performing metros for development activity as a percentage of existing stock.

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Podcast: The Most Probable Outcomes for Post-Coronavirus Office Demand

In this episode of our quarterly FTI Consulting podcasts, Jahn Brodwin explains why the office market is caught between favorable and unfavorable consequences of the COVID-19 crisis. Tune in to hear more about his expectations.

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

As signs of stress appear, Paul Fiorilla of Yardi Matrix takes stock of what’s ahead for mortgage performance.

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Blackstone Takes Co-Starring Role in $1.7B Hollywood Portfolio

Under this joint venture, Hudson Pacific Properties will retain majority ownership of its 2.2 million-square-foot collection of studios and office buildings.

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