In early-mid March, escalation of the COVID-19 pandemic took the winds out of the sails of an active commercial real estate market. LightBox launched a survey on April 9th to monitor how our clients—commercial real estate professionals across a broad swath of the industry—are responding to the business challenges associated with controlling this unprecedented health crisis.
More than 110 environmental due diligence consultants, appraisers, commercial real estate brokers, lenders and investors from across the United States participated in this inaugural Market Confidence Survey. The results shed light on how organizations’ capacity/productivity changed as state and local governments implemented shelter-in-place orders, the strategies adopted by firms during the shutdown and the way clients have adjusted common practices in their efforts to meet clients’ needs during this challenging time. The range of LightBox’s operations allows us to paint a picture of how different hubs are being impacted and how they’re planning for tomorrow.
The reactions are a story of mixed sentiments. The shutdown, as shelter-in-place directives took hold, hit the broker segment first as some deals stalled and new listings hit a roadblock. Certain lenders are still lending, but their risk aversion is amped way up. Consultants were challenged to conduct due diligence work without being able to conduct site visits or access libraries the way they are used to. Appraisers responded to lenders’ demands for re-valuations of properties whose asking pricing were being called into question in murky market conditions. Among the key findings:
It is still too early to guess when sellers will be comfortable listing properties again, when buyers will have access to financing, and when we will be able to determine the impact on commercial property values. The precise impact that the coronavirus lockdown will have on our industry depends on many factors, including how quickly the health crisis is controlled and shelter-in-place orders by state and local governments are lifted. LightBox will continue to collect insights from our clients and report observations back to the market as this stage of the cycle continues to evolve.