24 Feb How is the Coronavirus Impacting Commercial Real Estate?
How is the Coronavirus Impacting Commercial Real Estate?
The deadly coronavirus has begun to impact the global economy and U.S. real estate companies are looking at how this crisis could affect construction sites and development pipelines. With more than 75,000 people infected with the coronavirus, it has also hit the bottom line of some of the world’s biggest companies.
Apply reported last week that their latest smartphone would be delayed, effecting first-quarter sales. A drop in international travel will cost airlines some $29 billion this year according to the International Air Transport Association. Those are just a few of the big names, but others include Facebook and Disney.
“For the first time this week I heard from two general contractors that they had materials caught up in ports because of the coronavirus — we’re starting to see some of that,” Hoffman & Associates Executive Vice President Maria Thompson said at a Bisnow event in Washington, D.C., this week.
Commercial real estate sources have not reported an impact yet, it has some already operating in a worst-case scenario.
“It takes three-plus weeks on a good day to get anything from China to the U.S., through customs, etc.,” said FullStack Modular founder Roger Krulak, whose firm makes modular building at a factory in the Brooklyn Navy Yard and has four projects underway in New York City right now.
Construction in the U.S. relies on materials from China, and specifically items such as plumbing and electrical fixtures, concrete boards and tile flooring.
“Even a slight curtail in a booming construction market is just going to cause supply constraints,” he said. “From a financing perspective, it’s incredible concerning. It could mean construction delays, delays in finishing buildings, delays in certificates of occupany, increased construction costs,” said Krulak.
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