Help is available for all sectors of commercial real estate market
The economy has taken a serious hit during the past month. And it’s not over, by any means. The nationwide lockdown resulting from the looming COVID-19 pandemic is idling employees all around the country and has slowed many markets to a crawl.
Among those hard-hit markets is real estate. People who can’t work find themselves struggling to pay the rent or the mortgage. Businesses that have closed down during the pandemic may also have difficulty paying for their space, or even surviving. All of this has created a great deal of uncertainty in the market.
The number of people shopping for real estate — including commercial — has dwindled as people are confined to their homes. The shroud of uncertainty has undoubtedly created deep concern, curtailing investment until better times.
Consequently, the U.S. Congress crafted the CARES Act, which the President signed into law on March 27. It is an effort by the federal government to provide economic stimulus and prevent a severe recession. This stimulus is designed to boost the economy by infusing it with more than $2 trillion.
The CARES Act allocates $250 billion to enhance unemployment benefits, offering furloughed employees an extra $600 per week for up to four months. It also will provide $1,200 to all adults who filed tax returns last year and made less than $75,000 (a max of $150,000 per couple). They can also receive $500 per child.
It will help families stay in their homes by placing foreclosure restrictions on federally backed mortgages when those foreclosures are the result of COVID-19 hardship.
Provisions of the CARES Act are expected to benefit commercial real estate. For example, in the office sector, businesses will have funds and loans available to help them remain in their facilities.
In the retail sector, the CARES Act will offer loan forgiveness and help businesses keep their employees. Industrial businesses will benefit from the help available to the airline and cargo industries. The airline assistance, incidentally, is likely to fuel the travel and leisure industries once the crisis abates, fortifying commercial real estate’s hotel sector.
One of the big question marks in commercial real estate right now is multifamily. The cash payments and unemployment help in the CARES Act are intended to help tenants stay in multifamily facilities, which should alleviate some of the distress in that market. As a result of the current emergency, Fannie Mae and Freddie Mac, among other financial institutions, will offer forbearance options to borrowers who might otherwise default.
In the meantime, there are measures that seriously affected businesses can take as the COVID-19 crisis lingers. The CARES Act allows borrowers to apply for a 90-day payment deferral on small business and consumer loans.
Owners of small businesses may also apply for a Small Business Administration (SBA) Economic Injury Disaster Loan. This loan is not through a financial institution, but directly through the SBA’s Disaster Assistance Program. You can get a jump by applying now at www.sba.gov/funding-programs/disaster-assistance.
COVID-19 and the accompanying economic downturn will undoubtedly have an impact. But by taking advantage of the CARES Act provisions, businesses and individuals may recover more quickly and we can return to a vibrant U.S. economy.
SVN advisors specialize in retail, leasing, office, multi-family, industrial, land, hospitality, medical office, marina, self-storage, property management and accelerated sales. Operating within a culture of collaboration, all SVN advisors practice compensated cooperation to leverage property to the entire brokerage community.
The SVN Commercial Advisory Group brokerage team continues to monitor and respond to concerns about COVID-19 (coronavirus) and its impact on the real estate industry. We are actively working on new and existing transactions, conducting virtual tours, and staying engaged with the market and our clients. Do you need to speak to a commercial real estate expert? You can reach Managing Director Matt Christian at (941) 914-6614 or firstname.lastname@example.org.