With the public markets in turmoil, the breadth of the outbreak unknown and information coming from all different angles, we wanted to take the opportunity to have a conversation about what the potential impacts of the COVID-19 virus might be on commercial real estate.
While the personal impacts of this outbreak hit close to home here in Portland, OR, we understand the uncertainty this is causing for investors generally, and more specifically as it relates to their portfolios and potential investments in direct real estate investments.
The safety of our community always comes first, and please find the links to the CDC and WHO’s most current updates on the outbreak. Basic hygiene seems to be the best preventative measure at this point, so wash those hands and practice vigilance if experiencing any symptoms.
In this episode, Mitch Roschelle, Partner at PwC, was kind enough to spend an hour with us this morning discussing the macro impacts, the recent market swings and a property category specific outlook for each of the major investment classes.
We discuss the Adjustment Process as outlined in this great article by Dr. Peter Sandman, what economic factors to watch as this continues to unfold, and Mitch’s outlook on each of the main asset categories of commercial real estate investments.
We are definitely in the very early stages of this outbreak here in the US, and it remains to be seen what the ultimate outcome may be. Mitch provides commentary on how the long term, contractual nature of real estate cash flow should help insulate it from the volatility we are currently seeing in the equity markets and how volatility often leads to a flight to safety and stability - something that direct investments in income producing real estate tends to provide over the long term compared to its more liquid counterparts.
As always, please let us know your thoughts on this issue and if there are any specific topics you would like us to cover. We understand this is a developing scenario, so please note this podcast was recorded on the morning of March 3, 2020 and as we learn new information, what was discussed may become subject to new information.
Stay safe out there and we hope this episode helps illuminate the state of the market as it relates to COVID-19’s impact on your real estate investments.
**Less than an hour after we recorded this episode, it was announced that the Federal Reserve cut the target range for the Federal Funds Rate by 50bps as was discussed on the episode.**
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