The Immediate Crisis
Over the past decade, real estate was an excellent area for investors to generate a nice and steady cash flow and good returns with a fairly low risk. Nevertheless, the coronavirus pandemic has changed this reality, most real estate players taking a tremendous hit. Service providers are having a hard time at mitigating health risks for their staff and customers.
Real estate developers face project delays and stoppages, as they can’t obtain their needed permits in time to stick to their constructions schedule. This situation leads to the shrinkage of their rates of return. In addition, many asset owners and operators suffer from a severe reduction of their operating income, as their tenants are unable to keep up with their lease payments. With many people losing their jobs, the future doesn’t sound any better, so there’s no wonder all players in the real estate industry are nervous about their cash flow. Everyone wants to find out what kind of concessions would be reasonable, in order to be able to make some predictions for the future of their businesses. Floor Plan Designers can help people with online viewings but more changes must be made.
Behavioural Changes That May Be Here to Stay
Real estate owners and operators are trying to figure out some of the potential long-term effects of this crisis and the changes these shifts will bring. Commercial office space is one of the best examples, as the latest trend toward putting more people into smaller spaces to work together may see a very abrupt change. The post-coronavirus world is one of distancing, of fluid spaces and well-defined circuits.
How the Biggest Real Estate Owners and Operators Manage the Current Situation
Nobody can actually predict the long-term consequences of this pandemic. Nevertheless, the short-term consequences of the crisis are already obvious – the public market sell-off has seen a steep decline in certain types of real estate assets. Public and private companies alike try hard to mitigate the current situation concerning tenants, staff, and clients, while also needing to face some difficult business trade-offs. Top leaders in this industry try hard to find the right balance between preserving their capital and strengthening their points of differentiation from competing companies.
It’s All About Trust, Respect, and Loyalty
Owners and operators should make it their top priority to protect the health and the safety of their staff, clients, and business partners. This means that they have to intensify their communication to ensure that they fully understand what the current needs of their tenants are and how they can protect everyone that’s part of their ecosystem. This may require steep changes in behaviour, in order to shift their communication from a property-level branding to company-level branding. In fact, this market trend was already here, so it will only need to speed up its evolution.
Centralised Cash Management
Centralisation was never a thing in the real estate industry. Most major decisions that influence cash flow have been made at a property level. However, taking into consideration the extent of the current crisis, top management starts shifting toward a more centralised direction of cash management. All levels of management are working to identify effective methods to increase their efficiency, as well as the right moments to apply these methods to improve the performance of their properties and of their entire business.
Making Informed Decisions on Commercial Lease Concessions
As appealing as reductive assumptions may seem, it is impossible to assess the economic impact of the coronavirus outbreak without taking a closer look at each of the real estate portfolios to consider. Decisions should be taken on an individual situation basis, and only after a thorough research of all possible scenarios.
Even before this crisis, the real estate industry started to move toward using the digital space a lot more. Now it is even more important to keep everyone safe by making use of virtual presentations and open house events.
Some of the real estate owners are already thinking about the post-pandemic times and about the best things to do to thrive in the new world.