Physical distancing has directly changed the way people inhabit and interact with physical space, and the knock-on effects of the virus outbreak have made the demand for many types of space go down, perhaps for the first time in modern memory. This has created an unprecedented crisis for the real estate industry. Beyond the immediate challenge, the longer this crisis persists, the more likely we are to see transformative and lasting changes in behaviour.
The Immediate Challenge
Over the past several years, real estate investments have generated steady cash flow and return significantly above traditional sources of the yield—such as corporate debt—with only slightly more risk. Since the virus outbreak, however, this reality has changed, and real estate players have been hit hard across the value chain. Service providers are struggling to mitigate health risks for their employees and customers.
Many developers can’t obtain permits and they face construction delays, stoppages, and potentially shrinking rates of return. Meanwhile, many asset owners and operators face drastically reduced operating income, and almost all are nervous about how many tenants will struggle to make their lease payments.
Changes That May ‘Outlive’ The Crisis
Real estate owners and operators across almost every asset class are considering several potential longer-term effects of the coronavirus outbreak and the required changes that these shifts are likely to bring.
For example, within commercial office space, the multiyear trend toward densification and open-plan layouts may reverse sharply. Public-health officials may increasingly amend building codes to limit the risk of future pandemics, potentially affecting standards for HVAC, square footage per person, and amount of enclosed space.
It is possible that the demand for senior living assets could dampen, or the product could change altogether to meet new preferences for more physical space and more-intensive operational requirements. It is also possible that senior-living facilities could prove they are best able to handle viral outbreaks, accelerating demand.
How The Prime Agents Are Tackelling The Pandemic
Just like many businesses throughout the UK, affections caused by COVID-19 are unavoidable and The Prime Agents are no different. We have continued to uphold our excellent service where functional, proceeding to provide our clients with our prestigious support.
For further information on our services and how they may have been affected by the crisis, be sure to contact our team. Though some of our methods may have been altered to suit guidelines, we are still as determined as ever to provide our clients with exactly what they seek.