CPE’s June 2020 Must-Reads
- Jul 06, 2020
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: