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CBRE’s Chairman of Americas Research and Senior Economic Advisor Spencer Levy released the company’s outlook for the economy and specific commercial real estate sectors. Levy and his team addressed the impact of the COVID-19 pandemic and the affect containment measures have on the commercial real estate outlook.  

“Much of America is planning its return to the workplace. While that is a welcome turn of events, we also need to acknowledge and embrace that companies will return – slowly – to a changed workplace with new procedures,” Levy said in a statement. “Office users likely will practice social distancing by rotating employee groups allowed into the office on certain days. Restaurants, stores and hotels will need time to reassemble their workforces and restock supplies while limiting in-person patronage. It is likely that society and business won’t fully return to normal until we have a vaccine.

“Meanwhile, as commercial real estate copes with ramifications of COVID-19, collections of April rent surprised on the upside for office, industrial and multifamily at around 90 percent. However, April collections were below expectations for retail at between 20 to 40 percent on average depending on asset type. The industry is watching May collections even more closely as an indicator of the health of commercial real estate in the short term. 

“Despite the tremendous economic challenges in front of us, pent-up demand from consumers and office users will provide a spark for spending and office use shortly after movement restrictions are loosened.”


  • Economic news last week was downbeat, with U.S. unemployment forecast to have risen to 10.5 percent from 3.5 percent before the crisis. CBRE’s forecast remains for economic stabilization to occur in the third quarter and recovery beginning in the fourth. Meanwhile, with virus curves bending in some parts of the U.S., the federal government has announced a plan for a phased economic reopening in certain regions.
  • Each state will determine its timeline for reopening its economy, based on growth rates of COVID-19 cases, impact on the health-care system, extent of access to testing, and transparency around exposure sources. Once reopening begins, restrictions will be eased as further benchmarks for virus abatement are met.
  • Office owners and users have shifted their focus to planning their return to work. Common initiatives will include social-distancing guidelines, enhanced cleaning, new access protocols, and increased supplies of masks, gloves and sanitizers. Click here to read CBRE’s whitepaper on reopening workplaces.
  • Reopening Retail stores will require multiple safeguards, depending on the center: Limiting the number of entrances to control traffic and densities; enhanced cleaning in high-touch areas; enforcing social distancing in common areas; providing curbside pickup options; and reduced seating capacities in restaurants and movie theaters.
  • In the hotel industry, domestic leisure travel will return first, which will benefit drive-to destinations. Business travel will come next, through companies may face budget constraints. International travel to the U.S. won’t fully resume until the worldwide rate of new cases subsides. Conventions and group meetings are likely to be restricted well into 2021. CBRE forecasts a 46 percent decline in revenue per available room for U.S. hotels this year, with a modest recovery starting in the year’s second half.
  • In the Food and Beverage sector, a new survey by the National Restaurant Association found that 14 percent of U.S. restaurants have permanently closed or plan to do so within the next month. Even after the economy reopens, social-distancing efforts will further reduce the national restaurant seat count for a span before emerging concepts and expanding restaurants absorb the slack.
  • Payment ratios for April rent in the Office, Multifamily and Industrial sectors averaged 90 percent, according to preliminary data. Retail rent collections varied widely by shopping center format, according to CBRE’s surveys of its professionals and clients. In grocery anchored centers, 55 percent to 80 percent of April rent was paid. For non-grocery strip centers, the payment percentage was 20 percent to 40 percent. For malls and outlet centers, it is estimated at 10 percent to 20 percent. Shopping center owners who are engaging in rent discussions with their retailers are almost entirely focused on rent deferment rather than rent abatement (forgiveness).
  • The Industrial & Logistics sector has been the focus of more in-bound capital, but investors are preferring mostly core, big-box warehouses in primary and secondary markets in or near logistics hubs. The sector will be a net, long-term beneficiary due to strong e-commerce growth and retailers focusing more on inventory control in a post-COVID-19 consumption environment.
  • Financing for Multifamily-housing transactions still is available, but underwriting is more conservative. Early-stage transactions now are hampered by uncertainty over rent collections and rent growth. Requests and approvals for mortgage forbearance still are relatively limited but might tick up this week. Federal stimulus and strengthened unemployment benefits bode well for continued rent payments, but May’s collections warrant monitoring.
  • Data centers are relatively insulated from COVID-19 fallout, given that work-from-home initiatives and social-distancing guidelines have increased demand for bandwidth. Growth is anticipated for cloud solutions, while demand for enterprise solutions is likely to flatten in the coming months due to budget pressures on enterprise-IT organizations. Debt financing remains available for data centers, though at increased all-in rates.