Commercial real estate executives recognize the various challenges in the current market as a result of the COVID-19 pandemic, while remaining optimistic about future market conditions, according to The Real Estate Roundtable’s Q3 2020 Economic Sentiment Survey released today. The report emphasizes the importance for developing, testing, and distributing a vaccine in the coming months in order for market conditions to show further improvements.
“As our Q3 index shows, commercial real estate markets continue to suffer from the effects that the COVID-19 pandemic has had on businesses and residential tenants,” said Real Estate Roundtable President and CEO Jeffrey DeBoer. “Hospitality, senior housing, and retail commercial real estate tenants in particular are struggling currently, as are CMBS loan pools consisting of these asset types. Other commercial real estate sectors, notably office and multifamily, also are facing challenges related to the overall economic hit from the health care crisis and are very cautious in their activities. However, generally balanced CRE market conditions and responsible leverage prior to the crisis positions the industry to stabilize and move forward positively once a vaccine is available,” DeBoer added.
The Roundtable’s Q3 2020 Sentiment Index registered at 42 – a four point increase from the previous quarter. [The Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive]. This quarter’s Current Conditions Index of 21 increased eight points from the previous quarter, while this quarter’s Future Conditions Index of 63, is an increase of one point compared to last quarter, and a 13-point increase compared to Q1 2020.
The report’s Topline Findings include:
DeBoer noted, “While a vaccine continues to be explored, it is imperative that Congress and the Administration soon come to an agreement on the next round of COVID-19 relief. Extending added unemployment benefits, additional funding for the Paycheck Protection Program (PPP), and a rental assistance program to help impacted people as well as struggling small businesses is needed. Moreover, property owners, hospitals, schools and others need liability protection against frivolous lawsuits and businesses need assistance as they seek to cover new and unusual expenses related to safety and cleaning protocols.”
Data for the Q3 survey was gathered by Chicago-based FPL Associates on The Roundtable’s behalf.