CPE’s May 2020 Must-Reads

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

The coronavirus crisis and its implications for the market dominated real estate news in May, as it did the better part of the previous two months. We started the month by discussing impacts on the job market as preliminary U.S. job figures for April were expected to come out. By the end of May, some 42 million workers have lost their jobs since March, twice the number of jobs lost during the Great Depression. But it’s clear that not all employment sectors have been affected equally, with some proving more durable during a pandemic.

Understanding how COVID-19 is transforming the real estate market remained our chief focus in May. At the beginning of the month, Moody’s Analytics forecasted that retail will be the hardest-hit commercial real estate sector, with a projected decline of more than 10 percent in effective rent by year’s end. For this reason, we looked at what Simon Property’s first-quarter results say about the future of retail, as the REIT reopened half of its portfolio almost at the same time as Macy’s kicked off a phased reopening. Meanwhile, J.C. Penney announced plans to close more than 200 stores after filing for bankruptcy the previous week. It’s clear that the sector will have to undergo a few changes to adapt to a post-pandemic reality. Using the latest in data tools could help investors in the long haul.

While brick-and-mortar retail has been directly impacted, the e-commerce surge has contributed to an increased demand for warehouse and distribution space. We sat down with Bridge Development Partners’ Jeff Milanaik to discuss the changes brought about by the coronavirus crisis in major industrial markets, and with Stos Partners’ Jason Richards to talk about the industrial coworking’s business model and its long-term viability.

The office sector will also have to transform following the pandemic. Remote work is expected to be one of the big changes brought on by this crisis, and experts believe it’s, at least in part, here to stay. And as workers are more attentive to how the workspace impacts their well-being, healthy properties are likely to be in strong demand in a post-coronavirus world. What’s more, investment for medical office buildings has also been affected by lockdowns, but the property type’s future is anything but grim.

We’ve known from the onset of the outbreak that the hospitality industry is in for a significant slowdown, with states imposing measures to curb the spread of the virus. As more regions across the country—and around the world—begin a phased reopening of the economy, we examined what’s ahead for hotels post-COVID-19. However, recovery is likely to take longer than initially predicted.

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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CMBS Resilience Faces a Big Test

Insights from Yardi Matrix’s Paul Fiorilla on the biggest turning point in a decade for securitization.

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ULI Forecasts Strong CRE Growth to Return in 2022

Only industrial vacancies will resemble pre-pandemic levels, according to the Urban Land Institute’s latest semi-annual economic outlook.

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Pandemic Unlikely to End Construction in 2020

While demand in most commercial real estate sectors has taken a nosedive, some shovels will still hit the ground in 2020.

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NAIOP Finds Drop in CRE Confidence

The latest semi-annual Commercial Real Estate Industry Sentiment Index from NAIOP finds a notable uptick in pessimism from industry professionals.

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Kennedy Wilson, Fairfax Financial Launch $2B Debt Platform

The two longtime partners will target first mortgage loans secured by high-quality real estate in the U.S., Ireland and the U.K.

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KKR Lines Up $1B for European Data Center Platform

The new entity will have an estimated $2.5 billion, including leverage, to develop and operate data centers for technology clients across the continent.

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