Coronavirus and its Effect on Commercial Real Estate in FloridaMarch 13, 2020 • Author: Howard Taylor
There’s no doubt the coronavirus known as COVID-19 is causing some fear in the market as we’ve entered into bear territory, carrying the commercial real estate market with it. But, this isn’t the first time we’ve seen a bit of market panic due to a new and unknown virus and it sure won’t be the last. But, this is an opportunity for the industry to learn ways to weather any storm in the future. Here’s why it’s a bad idea to panic and how to keep yourself and your clients calm through this bit of market turbulence.
The Bulls Ran Through Three Other Pandemics
And, there is no reason to halt that momentum, even now. Since the bull run began in 2009, it has managed to weather three other pandemics like H1N1 swine flu, MERS, and H7N9 bird flu. MERS and the bird flu had mortality rates of more than 10x higher than COVID-19. While it is imperative to continue to monitor the situation, panicking over the coronavirus is in no way productive.
Even in one of the hardest-hit areas for the outbreak in the US, Seattle, commercial real estate developers are continuing business as usual. The quarantine efforts in China may at some point cause issues for developers. However, there is no guarantee that it will. For comparison, the H1N1 swine flu pandemic didn’t cause any interruptions in supply chains, and the impact made by the other two were negligible. Although supply chain issues have not yet occurred, formulating a contingency plan right now will help you avoid any headaches associated with a disruption that may occur.
In some ways, the pandemic may actually strengthen real estate developers as many corporate leaders are calling upon lawmakers to reduce or eliminate tariffs on exports in an effort to stave off a detrimental economic slow-down. It is important that the commercial real estate construction industry join in the call for reduced or temporary elimination of tariffs to encourage a boost in the global economy and balance out any added costs incurred by force majeure complications. Additionally, thanks to the Federal Reserve stepping in to lower interest rates, new loans and refinancing existing loans could allow many borrowers to lock in historically low rates.
An Ounce of Prevention
We can play a pivotal role and lead by example in preventing panic across the US and in the Florida developer industry in several ways. Be proactive and don’t fuel panic further while you maintain a finger on the pulse of the situation. Beat the impact of the coronavirus with these methods:
- Be understanding of labor issues caused by closures of public infrastructure
- Cross-train employees when possible to minimize interruptions due to absenteeism
- Keep spirits high with your employees, partners, and vendors by sending out friendly notes with promotional hand sanitizers to remind them that a little prevention can go a long way
- Remind on-site workers to distance themselves from one another, wear protective gear, and practice good hygiene as much as possible
- Encourage employees to make advance contingency plans for child care
- If non-essential employees are able to work from home, let them do so
- Clarify and augment sick-leave policies
- Communication will be key. Communicate issues early and update often
Here at The Griffin Group International, we are monitoring the coronavirus situation very closely. Our sentiments reflect that of our clients and vendors who agree that while we shouldn’t downplay the potential issues that may arise, there is definitely no reason to panic. We are firm believers in a proactive approach to see all of our projects through to completion. To learn more about The Griffin Group International, contact us or follow our LinkedIn business page.