IllinoisCRE Strategizing a path forward during the COVID-19 crisis Matt Baker March 26, 2020 Share on Facebook Share on Twitter Share on LinkedIn Share via email From left to right: John Joyce, CCIM, managing director at SVN Chicago Commercial; Geoffrey Kasselman, SIOR, LEED AP, senior vice president and partner, workplace strategy at CRG and Steven A. Kohn, SIOR, principal at Avison Young. The COVID-19 pandemic has changed—practically overnight—just about every facet of society. In these uncertain times, how does one get a handle on the business landscape? REjournals hosted a webinar, with more than 220 people listening in, that tackled that very question, and also speculated about what lies ahead. Three industry veterans provided their years of expertise, as well as a little bit of guidance during a worrisome era. Joining the webinar were John Joyce, CCIM, managing director at SVN Chicago Commercial, Geoffrey Kasselman, SIOR, LEED AP, senior vice president and partner, workplace strategy at CRG and Steven A. Kohn, SIOR, principal at Avison Young. Commercial real estate isn’t a property business, it’s a people business—which is why the stay-in-place mandates are making it so hard to get work done. Kasselman talked about reaching out to colleagues and clients, to be of value and a resource to them. He said he has done this and it’s both helped everyone to stay sane during a troubling time and also led to interesting business conversations. “We have to get used to a new normal,” Joyce said. “I’m an office kind of person, so I don’t really like working from home. but I’m getting used to it.” The three speakers fielded a number of questions from the digital audience about where the industry and overall economy are headed. While everyone expects a recession to come about as part of the pandemic, there will still be some opportunities out there. “Most of us have had a wonderful run over the last eight or 10 years,” said Kasselman. “However, I was a broker for over 31 years before jumping over to CRG and some of my best years were in the down cycle.” Kohn agreed, quoting Lou Kahnweiler as saying that you make your money in real estate on the buy. For those in the position to acquire them, land and assets will become much cheaper during a bear market, ready to turn a profit once the economy rebounds. “I think a lot of fortunes are going to get made over the next year or two by people buying things right,” Kohn said. “Main and Main is still going to be Main and Main after this horrible event occurs.” Turning to the individual asset classes, all three agreed that long-suffering retail will only be further battered by the pandemic countermeasures keeping people at home. “Retail and restaurants are getting creamed,” Kasselman said. “Retailers were already reeling and on the defensive. Many of them won’t make it back after this event.” The one bright spot is industrial, which will likely perform the same as, if not better than, it had over the past few years. Many of the Chinese factories have started production again and there are no reasons why the pandemic should have any deleterious effects on online shopping. “Of course e-commerce is going to continue to improve,” said Kohn. “If you’re a broker for Costco, or Walmart or Amazon, you wouldn’t be on this call today. You’d be so busy trying to secure a space.” The tea leaves are harder to read for multifamily. The courts and sheriff’s offices aren’t enforcing evictions on renters who are out of work and unable to come up with rent. No one knows what relief, if any, there will be for those property owners. It’s also hard to gauge what impact the office sector will feel. The panelists agreed that corporations aren’t going to scale back their footprints due to so many people working from home as, eventually, most employees will return to their desks as usual. As for co-working spaces, the situation is rather bleak in the near term. No one is using them at the moment and once we stop social distancing, the free flow of travel through these spaces makes them riskier—if only in perception. Long-term, however, they will probably rejoin the ascendant trajectory that they had been on prior to the pandemic, as users continue to be drawn to the space as a service model. All in all, Joyce, Kasselman and Kohn had a sobering message for the current state of affairs, but all three could see the light at the end of the tunnel. “We’ve been through this before,” Joyce said, referencing economic downturns following the dot-com bubble, 9/11 and the 2008 housing crisis. “I would say to young brokers or professionals that are in the business, reach out to the senior people in your office. They’ll appreciate you asking. If you’re confused on any matters, it’s okay, this is a confusing time.” REjournals will continue to host webinars to keep the commercial real estate community informed during this catastrophe. 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