Needless to say, these are unprecedented times. The national shutdown is probably the most disruptive event of my lifetime. The uncertainty about the length is part of what makes is incredibly difficult to make plans, particularly for real estate.
At this point, because this escalated so quickly, all parties are trying to best assess a way forward with incomplete information. The main consequence we have seen so far is the postponement of store openings or the extension of build-out periods for new tenants (Like HomeGoods at Edmond Crossing). Many tenant's, particularly restaurants, are getting killed. Rent is an important but, overall, small part of their operating expenses - most are just trying to figure out a way to survive. Small, local tenants are particularly susceptible. We're pointing them to the SBA and other pending government assistance. Each Landlord's case is different but all the Landlord's we work with are sympathetic to tenants and want to work with them the best they can given their financial constraints. Landlords will begin to feel the pain in April when rent is due. Most are speaking with their lenders now about possible loan modifications. Banks will then get squeezed as part of the fallout as well. With the exception of a limited number of companies (grocery, take out & delivery establishments, Amazon), everyone in our industry is about to suffer. All parties will most likely need governmental assistance in some form.
To date, we have seen very little fall-out on current deals. We have finalized a few leases within the last week and expect those that are close to be finished. Most retailers are in this for the long-haul and realize that they need to make decisions that will benefit them when this is over. Having said that and not surprisingly, new activity has ground to a halt (with a few exceptions); everyone wants more clarity on how long this will last. The exception appears to be investment sales - we anticipate continuing to see some activity albeit at a slower pace.
How bad this gets clearly depends on the duration. If it is a matter of weeks, it won't be pretty, but the market is resilient and we will recover fairly quickly. Longer and we as an industry and a country venture into unknown territory where I'd prefer not to go.
