If you thought that the corona virus situation is bad now, well it is only going to get worse for us later. We may eradicate the virus but the after effects of this pandemic on our economy and life will continue to haunt us for a long time to come. Almost all aspects of our life from low scale to higher scales have taken a hit by this pandemic. With the economy going down, the real estate market has also taken a blow.
Currently, everything is shut down and that includes hotels, restraunts, student housing and even malls which are a huge part of the real estate business. In this case where it is every man for himself right now, no one will step in to relieve the owners or help the real estate market. Residents are leaving expensive cities, retailers are closing down and companies are getting rid of office spaces due to the new work from home requirement and this could all be real estate’s worst case scenario.
In an interview a retail consultant Kevin Newlin said,
“The worst case is that we get lulled into a sense of, ‘Oh gosh, it’s going to be OK.’ and then come the fall we get a huge second wave that is larger than what we’ve gone through. I think that just decimates everything. Whatever tricked out consumer confidence was starting to resemble gets whacked up the side of their head.”
But, this is the worst case scenario, many people are hoping that does not become a reality. Meanwhile, there are some people who are really worried about the future and even experts say that if it gets any worse, the economy will not be able to recover until 2022.
President of a private equity firm Verde Capital, Jake Reiter said,
“Anybody that says we’re going back immediately to the old normal or that we’ll magically have a cure for this and the economy is going to be [on a roll] by middle 2021, I think that’s hyperbole. I just don’t understand how anybody could have that view.”
Before this corona virus outbreak, retail market was already living through declining sales due the mass market phenomenon of ‘online shopping’. This pandemic has only added fuel to this situation and on this situation Kevin Newlin said,
“A lot of the debt burden that these retailers are carrying has kept them from being able to invest aggressively online. All this did was accelerate what was coming. That could be problematic with all retailers – even high-end luxury brands – struggling for survival. These big chains aren’t going to be taking on new space. They are going to be letting go of underperforming space”
A lot of the brands have already filed for bankruptcy which has left the mall owners worried. Other than this, office properties are also vacant and a lot of the tenants have failed to pay the due rent and have cleared out the space especially when companies are giving the green signal to work remotely. Even, Facebook and Google ordered their employees to work from home until 2021. With major companies going down the hill, we should all prepare ourselves for the worse.
The City of Blogs 