Are you currently in a Tier 1, Tier 2 or Tier 3 market? Or perhaps a gateway city, a 16-hour city or a secondary market? Are you sure?  

Tier models rank metropolitan real estate markets based on their investment potential or growth characteristics. But different analysts use different methodologies and rank markets differently as a result. Adding to the potential for confusion, analysts often adopt different terminologies to describe markets and may create separate rankings for different property types or different audiences. 

Originally published in NAIOP's Summer 2020 Issue By Shawn Moura, Ph.D., Trey Barrineau

The COVID-19 pandemic might not have a massive economic effect on the office sector, but it could spark big new ideas on the use of space.

The office sector appears to be less vulnerable to disruptions associated with the coronavirus pandemic than retail or hospitality, but it’s not entirely immune to an economic downturn — or the acceleration of changes in the ways people have been working  during the crisis.

Originally published on June 23, 2020 by Shawn Moura Ph.D.

Last week, NAIOP conducted its third survey of its U.S. members on how the novel coronavirus has affected their businesses and local markets. The survey examines the outbreak’s effects on conditions in commercial real estate and evaluates how firms have responded. The June survey results reveal that development conditions have continued to improve since May.

Originally published by Bloomberg CityLab on June 22, 2020.

As cities emerge from coronavirus lockdowns, the way people use parks, stores, restaurants, transit, streets and homes is changing in ways both subtle and dramatic.

Originally published by the Real Estate & Building Industry Coalition

Governor Roy Cooper announced yesterday that as trends move in the wrong direction, North Carolina will remain in Phase 2 for three more weeks. Executive Order 147 also requires face coverings in public and at various business settings where individuals cannot maintain a physical distance of six feet from others.

Originally published on June 22, 2020 by NAIOP.

NAIOP, the Commercial Real Estate Development Association, has selected Kilroy Realty Corporation (NYSE: KRC) as the 2020 Developer of the Year – the association’s highest honor. The award will be presented during NAIOP’s CRE.Converge conference in Las Vegas this October.

Originally published on June 9, 2020 by Chris Barnet in DMagazine.com.

Imagine the last time you went to the doctor. You likely rode up an elevator and sat in a lobby or waiting room, elbow-to-elbow with other patients. You probably filled out paperwork, either with a pen and paper or maybe a touch screen device. Unless you were sick, you probably didn’t wear a mask.

Originally published on June 16, 2020 by NAIOP.

After weeks of pumping the brakes on a so-called “phase four” coronavirus relief bill, the White House recently signaled its interest in moving an additional legislative package, provided it includes certain priorities.   

Buildings and businesses that have been closed (or open at reduced capacity) for a prolonged period have reduced water usage, potentially leading to stagnant water inside building plumbing that could become unsafe to drink. Businesses should take steps to flush the building’s plumbing before reopening.

Clearing the water lines, known as flushing, can be done by running the tap water for an extended period in the building. The goal is to turn over the water left in the pipes with fresh, clean water from the public water main. This process will clear the stagnant water when reactivating dormant plumbing systems and ensure the water in the building is safe as well as taste and odor-free before the resumption of regular water use.

The economic disruptions from COVID-19 have had significant impact on the credit quality of tenants, building occupancy and demand from buyers, resulting in substantial uncertainty in the valuation of commercial real estate and complexity in the accounting for lease modifications.

John Thomas, CEO of Physicians Realty Trust, and Dennis Power, CFO of the Opus Group, shared their experiences with tenant collections, lease concessions, market demand, and the resulting impacts on real estate valuation across their market niches. Brent Maier provided his view on the impacts he has seen in his role as the leader of Baker Tilly’s real estate transaction advisory services team while Mike Kamienski and David Jamiolkowski, also from Baker Tilly, shared their view of how these issues will impact financial reporting from a real estate impairment and lease accounting perspective. Don’t miss this discussion of critical topics so you understand the valuation and leasing impacts from COVID-19.

Click Here to Watch Webinar

Originally published on June 5, 2020 by Shawn Moura, Ph.D. 

The coronavirus pandemic has accelerated social and economic changes that were underway before the outbreak, while also leading consumers, workers and employers to adopt new preferences and behaviors. Collectively, these changes will require that commercial real estate firms adopt new approaches to design, customer relations and business operations to be successful in the future. Christopher Lee, founder and CEO of CEL & Associates, offered his predictions for how the outbreak will reshape demand for commercial real estate in the U.S. and outlined steps that firms can take to remain competitive during a recent NAIOP webinar.

Originally published on June 3, 2020 by Clay Edwards

As offices are set to reopen across the country over the next few months, many companies are considering all their options to make the workplace as safe and healthy as possible for returning employees. Companies will need to do more than put hand sanitizer dispensers everywhere and rearrange desks to put employees’ minds at ease.

NAIOP provides critical commercial real estate education, connections and advocacy that help our members’ businesses and the industry advance. Members benefit from the resources and networking provided by both NAIOP Charlotte and the 20,000-member-strong North American association. Take advantage of the full scope of member benefits, including FREE on-demand courses through Aug. 1!

Click Here to Read More

Originally published by NAIOP on June 9, 2020.

Last week, the Senate unanimously passed the Paycheck Protection Program Flexibility Act of 2020 (H.R. 7010). The legislation eases a number of requirements that must be met in order for PPP loans to be forgiven. Notably, H.R. 7010 extends the “covered period” during which PPP loans must be spent on eligible funds, from 8 to 24 weeks, and allows recipients to use up to 40% of loans on non-payroll expenses, up from the previous cap of 25%. Shortly after passage, President Donald Trump signed the measure into law. 

During April 17, 2020, NAIOP Charlotte Board Meeting, the following market perspectives were offered from board members:

• Construction continues to proceed. Seeing smaller work crews on-site, but not slowing progress. Not seeing material issues at this time. New deals, if capitalized, are moving forward.
• Developer and investors are hoping construction pricing to decrease as much as 20% but the construction industry is saying maybe 2%.
• Seeing construction lending delayed by 30‐60 days due to banks focusing on PPP.
• Big picture – Charlotte is still looking good to pull out of this when the time is right.
• “Uneven” based on product type and where a project is in the process.
• Retail is brutal. The only tenants that haven’t requested rent relief are grocery stores, drug stores, and quick-serve restaurants. Each answer is different. We need to look at the space and how we continue to provide a new experience in the retail of the future.
• After this, we will have a greater realization that we create community – not sure brick and mortar retail will be dead.
• On Monday (4/20), City will hold their first virtual rezoning meeting which will include public input through council members, chat, speaking upon appointment. No decline in zoning or permitting applications.
• C‐4 is a new coalition of general contractors on a call twice a week with city and county (maybe 80 people on each call). As a group, developed best practices for a safe environment.
• Many hotel owners are closing their location or 5‐15% occupancy.
• Not seeing distressed sales yet.
• In corporate America, how well offices adjust for future remote working? They are seeing some indications of 10% of remote workers to 30% remote workers. Corporations looking at hoteling and new design features. Will the old‐fashioned suburban office park may come back? New projects, looking at touchless entry for security and door entry.
• WELL program – thinks that may have a good opportunity for a future program.

The NAIOP Research Foundation has published the NAIOP Office Space Demand Forecast for Q2 2020.

Key Takeaways:

• Due to the turmoil in the national economy, rising unemployment and continued uncertainty about future work arrangements, the U.S. office market absorption is forecast to decline into negative territory through the second quarter of 2021.
   
• The steepest declines may be experienced in the third quarter of 2020, with NAIOP's model forecasting a drop of 16.3 million square feet. Absorption rates will increase as the economy begins to gain traction in 2021.
   
• While the economic benefits of density and agglomeration are well-documented, COVID-19 may necessitate a type of "de-densification" in office space, at least in the near term. As a result, current office-using space will face short-term logistical challenges.
   
• While U.S. states begin the process of a staged re-opening, employees will arguably put a premium on workplace cleanliness. They will also put a premium on personal space, which may contribute to increased demand for office space.
   
• Many large organizations have begun to consider a "hub-and-spoke" model for work arrangements, enhanced by technology that allows for the economic gains from agglomeration while recognizing the challenges created by the pandemic.

The companies represent different approaches to the future of real estate, and their success or failure will offer important lessons to landlords.

The collapse of WeWork’s $47 billion valuation was the most exciting real estate story of 2019. Landlords, lenders, customers and competitors watched in awe as the company crashed into a wall of scrutiny and ridicule. In 2020, Airbnb might offer a similar spectacle, with a $35 billion valuation and a growing number of questions about the company’s long-term prospects.

What propels both companies? The changing needs of end users and the growing appetite of venture capital investors to disrupt the way real estate assets are operated and transacted. Both trends will keep transforming the industry, regardless of the struggles of WeWork or Airbnb.

Date: Thursday, June 11, 2020
Time: 2:00PM/EDT

The economic disruptions from COVID-19 have had significant impact on the credit quality of tenants, building occupancy and demand from buyers, resulting in substantial uncertainty in the valuation of commercial real estate and complexity in the accounting for lease modifications.  John Thomas, CEO of Physicians Realty Trust, and Dennis Power, CFO of the Opus Group, will share their experiences with tenant collections, lease concessions, market demand, and the resulting impacts on real estate valuation across their market niches. Brent Maier will provide his view on the impacts he has seen in his role as the leader of Baker Tilly’s real estate transaction advisory services team while Mike Kamienski and David Jamiolkowski, also from Baker Tilly, will share their view of how these issues will impact financial reporting from a real estate impairment and lease accounting perspective. Don’t miss this discussion of critical topics so you understand the valuation and leasing impacts from COVID-19.

Originally published by Matt Richtel on May 28, 2020 for The New York Times.

Upon arriving at work, employees should get a temperature and symptom check.