COVID-19 And Real Estate: In Pain, Adapting, and Learning
Posted on April 7, 2020 by Hank Boerner – Chair & Chief Strategist#Binyu Zhao #Ceres #Columbia University #Commercial Real Estate #Dr. Risa Lavizzo-Mourey #E&Y #Frederick Peters #International WELL Building Institute #IWBI #NAR #National Association of Realtors #National University of Singapore #Real Estate Sector #Retail Real Estate #WeRise2FightCOVID-19
G&A Institute Team Note
We continue to bring you news of private (corporate and business), public and social sector developments as organizations in the three societal sectors adjust to the emergency. This is post #14 in the series, “Excellence in Corporate Citizenship on Display in the Coronavirus Crisis” – April 7 2020 #WeRise2FightCOVID-19 “Corporate Purpose – Virus Crisis”
By Binyu Zhao – Sustainability Reporting Analyst-Intern, G&A Institute
The impact of the COVID-19 outbreak is being felt across all aspects of work and life. Understandably, the implications for major property sectors and various stakeholders in the industry are quite specific and different.
Although it is difficult to assess the longer-term repercussions, the real estate industry is already responding and reacting to immediate impacts and short-term risks with their best abilities. Their respective crisis response strategies also unveil loopholes and weaknesses that might be overlooked during peace and tranquility.
Therefore, the outbreak also presents the industry an expensive opportunity to thoroughly review its risk assessment procedures, crisis contingency plans, and to upgrade and update systems if necessary.
Commercial Buildings – Bruised and Fighting the Pandemic Head-on
Commercial building managers & owners are experiencing the most short-term volatility in terms of building management, business operations, and risk mitigation for holding both essential and nonessential business activities.
Following state-wide nonessential business closures, travel restrictions, working from homes orders, and the social distancing mandate, commercial building and business holders have quickly responded with several short-term mitigation measures aiming to enhance safety and well-being for employees and shoppers.
For essential businesses that remain open such as grocery stores and supermarkets, building managers and store owners responded with immediate mitigation strategies such as compulsory disinfection of shopping carts, and providing protective equipment for employees such as gloves and masks to improve hygiene.
Within buildings, yellows distancing lines were drawn in between goods shelves and near the counters to practice social distancing. Some buildings even provide wipes and hand sanitizer in the waiting areas and within the markets.
Meanwhile, although office buildings, hotels, and other non-essential-business-holding buildings are closing, shortening, and changing operation hours in affected areas, some of them are conducting a thorough cleaning and disinfecting of high-touch surfaces and taking ventilation precautions to prepare for reopening.
Just like the majority of society, commercial buildings owners and operators did not seem to have health crisis contingency operations plans beforehand.
Ill-preparedness led many owners and managers to react passively and belatedly, therefore missing their chance to contribute early to support society in fighting this crisis.
Retail markets – “Pushing the pause button, but not the stop button”
Real estate transactions are not completely coming to a halt amid the Coronavirus outbreak because many buyers still regard investment-grade real estates attractive in the long-term.
Usually, March is the starting month for a strong buying season, however as the impact of COVID-19 materialized, the industry changing its normal deal transaction processes in light of the travel restrictions and public health concerns to facilitate deal flow.
According to real estate brokerage specialist Frederick Peters, initially, the industry is normalizing the real estate buying processes to a “by appointment only” format, ensuring that only one viewer group could tour the property at a time to practice social distance and crowd control.
Meanwhile, during the usual tour, numerous precautions are put in place: plastic booties for shoes, alcohol wipes for doorknobs to prevent touching directly with bare skins, gloves (for agents), and hand sanitizer at both the beginning and the end of the display.
NAR Survey Results
A recent survey conducted by the National Association of Realtors (NAR) indicates that out of the 2,500 responses that were received, 1-in-4 home sellers nationwide are implementing practices such as requiring visitors to wash their hands or use hand sanitizers.
However, as situations worsen, some agents and developers are considering adopting visual reality technology so that potential buyers could remotely “visualize” property if the sale is contingent upon the buyer “seeing” the property before signing the dotted line.
More than that, many steps are formerly done in-person (like lawyer consultations and appraisals) are also finding their footing in the electronic space. Undeniably, these kinds of actions, albeit temporarily, could create a real estate transaction slowdown.
However, just as some real estate agents have been saying, the pandemic should not be the catalyst for positive changes that the sector should have already instituted long before — such as technological upgrade and updates that will greatly improve working efficiencies and facilitate business transactions.
Hopefully, the sector could learn a lesson and react quickly to changes in the future.
Real Estate & Building Associations – Learning & Preparing
This unprecedented COVID-19 outbreak has led many to question if the real estate industry and our infrastructures are resilient enough to continue to support society, especially during a public health crisis.
Therefore, to better understand and redefine the critical role buildings, organizations and communities play in crisis prevention and preparedness, resilience and recovery, the International WELL Building Institute (IWBI) is creating a Task Force to focus on reducing the enormous health burden from COVID-19 and other respiratory infections. (This the Task Force on Role Buildings Play in Reducing Health Burden of COVID-19 and other Respiratory Infections.)
According to Dr. Risa Lavizzo-Mourey, a co-chair of the task force: “This task force can help us focus quickly on actionable measures we can take to more fully deliver resources needed to advance a global culture of health that includes everyone” — and also will further study scientifically for enhanced opportunities for the built environment to improve population health.
Overall, the health and well being of employees and tenants will be the initial primary corporate concern for the real estate sector, followed closely by business continuity plans.
Given the rapidly-changing situation, operational resilience will be a longer-term focus for real estate decision-makers as businesses develop their ability to be nimble, flexible, and react boldly and quickly should they face another similar event in the future.
Information on the IWBI Task Force: https://resources.wellcertified.com/press-releases/iwbi-assembles-task-force-on-role-buildings-can-play-in-reducing-health-burden-of-covid-19-and-other-respiratory-infections/
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About the Author
Binyu Zhao is pursuing a Master’s degree in Public Administration at Columbia University. She served in the Climate Change and Sustainability Services Department at E&Y, and the Capital Markets Team in Ceres. Her strong bilingual skills enable her to provide services and conduct research for clients in Southeast Asia and East Asia. (She received her B.Eng. in Environmental Engineering and minor in Political Science from the National University of Singapore.)
G&A Institute Team Note
We continue to bring you news of private (corporate and business), public and social sector developments as organizations in the three societal sectors adjust to the emergency.
The new items will be posted at the top of the blog post and the items today will move down the queue.
We created the tag “Corporate Purpose – Virus Crisis” for this continuing series – and the hashtag “#WeRise2FightCOVID19” for our Twitter posts. Do join the conversation and contribute your views and news.
Do send us news about your organization – firstname.lastname@example.org so we can share. Stay safe – be well — keep in touch!