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South Florida’s Office Market Experts Weigh in on Impact of COVID-19
In the face of the COVID-19 crisis, current indicators suggest that South Florida’s office market is weathering the immediate storm. That’s according to panelists participating in NAIOP South Florida’s recent inaugural virtual roundtable Office Market: Report from the Trenches.
The Commercial Real Estate Development Association’s roundtable was moderated by Darcie Lunsford of Butters Realty & Management, who is also president of NAIOP Florida. Office market experts Mark Corlew of Grover Corlew, Greg Martin of Avison Young and Barbara Black of JLL candidly discussed immediate industry concerns, and their perspectives on the office market trajectory for the remainder of 2020 and beyond.
The panelists agreed that while more than 85% of tenants were able to meet rent obligations in April, with retail establishments as the hardest hit during the crisis, they will learn more as rents come due in May and June.
Among smaller business tenants, “the immediate panic has eased a bit for those who have received governmental loans,” said Corlew. “Tenants are now looking to us to assure employee safety as the economy begins to open back up, so we are working diligently to add infrared light to HVAC systems, provide extra janitorial services for common spaces and add more safety signage throughout our buildings.”
Avison Young’s Martin also pointed out that building operational expenses will inevitably rise, and questioned whose responsibility it would be if there was an outbreak, tenant or landlord, to clean up resulting biohazards.
“There hasn’t been a hard stop in terms of office transactions,” added JLL’s Black.
The panelists recognized, however, that new deals will likely be delayed as businesses take a wait and see approach while the healthcare industry works to find a vaccine. An uptick in office vacancies, an increase in subleasing, a dip in rental rates and more tenant requests to reduce rents are also expected in the coming year, the extent of which is still unknown. While financial lenders continue to be accommodating, there was some concern that any change in that sentiment could become more problematic for the industry.
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