Without a doubt, one of the main concerns for landlords is the financial stability of their tenants. As we look at the Coronavirus spreading with no immediate end in sight, the question is not whether it will adversely impact businesses; the question is how many companies will this affect and to what extent, Ailon Velger, chief product officer at property technology company Okapi, who is working with building landlords to scan for operational risk to do with the virus, tells GlobeSt.com.
“And while every landlord hopes their tenants won’t be hurt, it is beneficial to be aware of potential vacancies before they materialize,” he said.
Velger noted it is also important to stress that it is not just about companies defaulting on their leases. The greater the coronavirus risk, the less likely a company will expand its space or even renew an expiring lease.
With respect to property operations, there will be many challenges in this environment. Assuming that the sizable portion of the population implements the recommended social distancing measures and begins working from home, that will have a major impact on office and multifamily properties. Savvy operators will get out ahead of this trend and assess what implications the quarantines might have and how they can grapple with that reality, according to Velger.
If 50 percent of people begin to work from home, those settings would have to reconfigure. With half as many workers, the landlord would also not need as much building staff onsite, he added.
On the flip side, multifamily operators have to prepare for much higher daytime occupancy in their properties than is typical. Effectively, this means that many aspects of the building — electricity, plumbing, HVAC — will be working harder. “For landlords, it may be wise to proactively begin doing preventive maintenance to ensure that building systems are up to the increased workload,” Velger said.