Most of us became aware of Covid 19 on March 11 of this year when the World Health Organization first reported the rapid spread of the Covid 19 pandemic to 6 continents. However the 1st cases of this new or “novel” coronaviruses were identified as far back as November 2019. [The proper name for this particular virus is “Severe Acute Respiratory Syndrome Coronavirus 2 [ SARS-CoV-2]”. In the medical community the virus is termed coronavirus disease: COVID-19.
First identified inThis is not the 1st pandemic we have experienced & recent examples include SARS & MERS-CoV. [A more serious pandemic occurred in 1918 ; the Spanish flu which killed nearly 40 million people!]
The impact on the CRE sector was almost instantaneous & changes will likely be permanent because there's a high probability that we will never return to the "normal" that CRE professionals once knew.
One short term impact is that many businesses may “lock down” permanently or close, while the remainder have begun re-evaluating their premises. [ Experts are predicting a resulting drop in demand as many will re-negotiate leases.]
However it is possible that the recently announced wage subsidy for businesses announced by the Government will mitigate some short-term impacts. The Canada Emergency Commercial Rent Assistance Program ** (CECRA) has been introduced to cover a portion of employee salaries intended to support businesses who lost revenue due to the COVID-19. By providing forgivable loans to commercial property owners who will lower or forgo rents of businesses for April, May, & June. [**Applies more to retail & healthcare & the exact details are still under consideration: the final outcome of this program as it relates to the office market is still an open question.]
Over the long term most businesses, including those involved in commercial real estate will face challenges as planning takes place to modify workspaces & processes to enable all- important “social distancing” and other measures. [For those working from home the impact on each organization remains to be seen.]
However businesses are being forced to transform themselves quickly & will need to make assessments of their office or operational premises promptly to adjust for post COVID-19 operational norms and finding solutions for office and the workplace. [Occupancy "footprints" can be expected to change & any long-term modifications will require close attention.]
5 Questions Tenants Will Be Asking Themselves
It's very likely we will look back at the world before March 11, 2020 & the place we live in after that date. It is possible that the Canada Emergency Commercial Rent Assistance (CECRA) will mitigate the impact to a certain degree.
Our next instalment will discuss some of the steps you can take to protect your employees and cash flow during this crisis as we move forward.