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Remember the teacup-eared politician that promised to “fundamentally change America”?  It just happened. The transfer of wealth will be unprecedented. So where do we go from here?  Frankly, opportunities are at the forefront. Anyone who has been in this business for at least one cycle realizes that all property types do not react at the same pace during a cycle. This cycle may be very different though.  In the last cycle, we saw residential recover first, well-located retail seemed to be OK, then office and industrial recovered last.  Construction prices increased as a result of pent-up residential demand which ended up as a negative for office and industrial construction which was seeing a rebound with low vacancies and slightly improving pricing before the Covid-19 crisis.

This cycle will likely see industrial and residential as leading indicators.  Retail was under attack from online sales before the Covid-19 crisis so that will take a while to sort out. Office will change as nervous business owners retreat from bullpen environments back to “Covid social distancing” individual offices. Many meetings are now being held from Zoom and other platforms with a fair amount of success. While some analysts hopefully predict a V-Shaped recovery-it is doubtful that every property type and even class within a property type will react the same.

So what do we expect this cycle?  Many crystal balls are foggy.  Some practitioners think pricing will be unaffected. Some think prices will fall like a rock. Valbridge Property Advisors in Naples completed this client survey recently concerning values by property type:

Source: Valbridge Property Advisors April 15, 2020

Hospitality is in trouble.  But Vulture Funds are already circling. One SVN Hospitality Advisor reported he has been contacted by funds offering to buy at a 50% discount-cash-quick close.  Analysts are already looking for the repurposing of some hotels to a variety of housing uses or even some types of senior housing or assisted living. One SVN Hospitality Advisor said, “We are not over-built but under-demolished”. The comment made me chuckle but then think.

Restaurants are problematic.  As one operator told me yesterday, “how can you go through the last few months and then open at a maximum occupancy of 25% and survive? I predict 50% will fail”. Have you seen McDonald’s McDrive? (no indoor seating or counter service) So what does that mean?  Have restaurants been repurposed to retail and medical uses?

CBRE Research conducted a study of eight renowned organizations:


  • The only constant is change
  • Recent jobless claims are temporary
  • Look for the economy to rebound to 5% GPD in 2021
  • Expect unemployment to relax and stabilize around 15% in 2021
  • US Manufacturing will comeback
  • Don’t underestimate pent-up demand
  • Capital values are likely to be resilient over 12-36 months
  • The banking industry is in better shape than other downturns
  • Look for remote everything-Notary, Closings, Appraisals…
  • Look for drive-thru everything… See McDonald’s McDrive
  • And repurposing…


Author: Jim Boyd, MAI-Senior Advisor, SVN Commercial Advisory Group with a background in appraisal, brokerage, and development spanning several decades including retail properties, office complexes, industrial properties, mobile home parks, self-storage, residential subdivisions, apartments and vacant land of all types.