Covid-19 and Industrial Real Estate Values, Moving Forward

4/27/2020

I hope this note finds you well, healthy and safe with your family. I understand these are hard times and my sympathies are with those who have been adversely affected by this Corona Virus and subsequent economic fall-out. I hope you and your loved ones are safe and sound.

On the real estate “big picture,” industrial property is still well positioned compared to other asset classes. The demand for higher stockpiles of essential goods and medical equipment coupled with the probability of a manufacturing renaissance bringing production of those goods to USA manufacturers further helps the long-term outlook for industrial property. This will help protect the higher values industrial property has achieved over the last several years.

Locally, the Southern California population continues to create an atmosphere for a strong consumer base demanding essential goods and services. While retail and apparel related sectors have taken sizable hits, industries such as construction, manufacturing, and food distribution have remained robust through this daily changing landscape. It is important to note that since there will be some economic fallout as a result of the Corona Virus, well positioned and prepared investors may be able to find opportunities where sellers ‘need to sell now’ in a slightly softer real estate market. It is important to be prepared to take advantage of those opportunities. Give me a call to discuss how to best be prepared and to determine what size deal we should be targeting for you.

In regard to the landlord/tenant rent relief discussion, while most industrial landlords are currently looking for tenants to explore financial or rent relief through their insurance providers or the CARES Act government relief program, some are being creative in their willingness to work with tenants. The CARES Act is rolling out and making funds available, but insurance companies have been reluctant to pay Business Interruption Insurance claims, thus creating a liquidity problem for many business occupants in April, now looking at May's obligations starting to mount. Certainly, more will come out on these three major topics, and I will relay important updates to you. Call me anytime to ask questions or provide your opinion. I’ll welcome the opportunity to talk with you.