Did real estate predictions of 2020 come true? – Orange County Register
California residents have received good news in the past few days. Assuming our fall rates, percentage of infection and equity measures remain constant, we could be fully open to business in a few months. Good news!
That huge sigh of relief you feel comes from diners, bar owners, theater chains, and gyms. Disneyland, Universal, Knotts and Staples Center will soon be welcoming guests again – albeit with reduced levels and safety protocols.
In short, our lives could return to a sense of normalcy – whatever that means.
On March 20, 2020 I wrote a post: “Will the coronavirus change the real estate landscape forever?” How clear was my crystal ball? Let’s see
From March 1, 2020: “Social distancing, protection on site,“ coronation ”, learning from a distance – sentences that are now rooted in our lexicon and were not used a month ago. How have things changed – and how quickly!
In this column, I summarized an event that Northwest Mutual attended and hosted. The meeting focused on ways to get more of your company’s bottom line. The five causes of a bear market were also examined – one of which was a recession.
At the time, I was cautious about not predicting a recession, even though the disruptions in our supply chains formed as China suffered the effects of a largely idle workforce. Why walk around like Chicken Little? After all, the February job creation numbers were remarkable.
Boy was I wrong? It is often said that you see the big things coming, it’s the little things that you get! Little indeed – it was microscopic, in fact.
With our local economy at a virtual standstill and the raging tsunami of disruption shaking our psyche – will commercial real estate and its owners and residents change? Maybe forever? In a word, yes! Pamper me while I recap a few.
Office space. Although we are open to business, our physical location in Orange is closed to the public. Agents can come and go as they please, following the governor’s guidelines and encouraged to work remotely.
Employees are connected to projects that require attention with an internet connection. For the first time in the 37-year history of our office, we are completely virtual. We own our building with a partner who takes care of auto loans. Around 85 employees – in both companies – work in the 21,700 square meter, two-story structure. We pay around $ 731 per month rent per agent – albeit to ourselves. Do you need space? Safe for some companies. However, I am sure that many others will do the same math and ask the same questions. Done!
Retail stores. Impressive! Traditional retail was in a world of injury before the pandemic. Now? Pure slaughter. Many businesses that are beyond the brink of viability have just been pushed into the abyss. Few will return. For sure. The biggies – Walmart, Target, Costco, Home Depot – will rebound with a vengeance. But Amazon and other online portals will consume what is left in retail.
Some restaurants decide that online ordering and take-away are more profitable and adapt to smaller spaces. What remains is a landscape of empty shop windows. What about investors who rely on renting these tenants to service their debts and promote their lifestyles? You just got a wage cut. Done!
Automation. Hmmm. I don’t think any funding scheme has ever called sick, filed an employee application, sued an employer, or been late for work after a crazy weekend. I assume that manufacturers and logistics service providers – as soon as they find their way in the minefield of the business interruption – will restructure accordingly. Less trust in employees and more automation. Similar to a lack of readiness in front of a large shaker, local employers were not prepared for this level of disruption. Nailed something. What I underestimated was the insatiable demand for industrial space, which would rise in June 2020.
technology. I’m writing this from an iPad on our living room sofa. Many of you read this column online from your kitchen. On Wednesday my strategic business coach – The Massimo Group – hosted a webinar entitled “How to be a lighthouse in a storm”. Yesterday, three strategic partners and I took part in a Zoom call to discuss their worlds and some suggestions for dealing with our customers’ uncertainty.
For sure. This is not a new technology, but the way we used it has been innovative. Prediction: Look for an expansion in internet bandwidth, mobile solutions, and other technological advances. Telediagnosis? Impressive! Triple did it.
Public meetings. The 9/11 attacks changed security protocol forever. Do you remember when you could show up to the airport gate when your flight went to the taxi? I do! Or go through a door into a courthouse rather than under a metal detector. In amusement parks or sporting events it was never necessary until the last few years to empty the pockets with wallet, phone, keys and detachable belt buckles.
Will we now have our temperatures checked when we enter the Honda Center? “Excuse me. You’re a little hot – we can’t let you in.” Are networking events – chambers of commerce, provisors, BNI – now being held virtually? How about city council meetings? No public discourse? Well, maybe that’s positive. Professional games without fans? Return of drive-through theater? Wedding venues, country clubs, convention halls.
Absurd? May be. Maybe not. Think now about airline safety compared to 2000. Much has changed in 20 short years. Hmmm. I was a little bit mental here. Scary True!
Allen C. Buchanan, SIOR, is a Principal at Lee & Associates Commercial Real Estate Services, Orange. He can be reached at [email protected] or 714.564.7104.