COVID-19

Pandemic could mean opportunity for real estate investors

Andy Uhler Apr 7, 2020
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Could the post-pandemic housing market look similar to the post-Great Recession market? Justin Sullivan/Getty Images
COVID-19

Pandemic could mean opportunity for real estate investors

Andy Uhler Apr 7, 2020
Could the post-pandemic housing market look similar to the post-Great Recession market? Justin Sullivan/Getty Images
HTML EMBED:
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The COVID-19 pandemic has left no industry untouched. Many Americans and property owners didn’t have the cash to pay their rent this month. Which means some landlords are going to struggle with the mortgage, which means an opportunity for some property investors.

During the last financial crisis, there was a lot of distressed property to be had in South Florida.  

Daniel Lebensohn, co-founder of the investment firm BH3, said buying that distressed debt built the foundation of his company. He said nobody feels good about taking advantage of misfortune, but firms will be looking at this pandemic in the same light. 

“Now’s the time to innovate and go hunting because there will be opportunities,” Lebensohn said.

But KC Conway, chief economist at the CCIM Institute, thinks market changes will come in two phases.

“Phase one is really a repricing opportunity. And I think then the acquisition comes a little bit later, maybe six months down the road,” he said.

That’s because the real estate market moves slowly, and this pandemic is only a month old in the United States.

“It’s not as if anybody who owns anything is suddenly going to step up and say, ‘Oh, sure. A month ago, I could have sold this building for $400 a foot, but because I’m afraid of what’s happened in the market, you can buy for $200 per square foot,’” said Jim Costello, senior vice president at Real Capital Analytics.

He said it could get there at some point, it’s just not there yet.

And the hospitality sector is going to have an especially difficult time weathering this storm.

“Some of the areas like the hotels and the travel related … the restaurants, many of those are fairly tight on their cash flow and could actually be facing a situation where they need a buyer fairly soon,” said Calvin Schnure, senior economist at Nareit. 

And retail office space, one part of the market that many viewed as fairly safe, could be compromised because so many people have learned to work from home.

COVID-19 Economy FAQs

Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?

This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.

Could waiving patents increase the global supply of COVID-19 vaccines?

India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.

Can businesses deny you entry if you don’t have a vaccine passport?

As more Americans get vaccinated against COVID-19 and the economy begins reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.

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