There is no doubt that as we move forward through reopening, the impact of the COVID 19 pandemic will be longstanding. We talked to a few industry leaders to gain their perspective:
When asked about lessons learned to date, Ryan Jones, senior development manager, Panattoni said, “While I once thought I needed to be in the office, I’ve found most can be done remotely and through the use of technology. So I’ve learned that limited interaction with the office can still produce significant efficiencies. Necessary interoffice interaction can be done on a limited basis following safe distance guidelines.” He also added, “It’s important to keep the human connection with people. It’s easy to only use e-mails to communicate, but the personal interactions via phone calls and video conference keep the personal connections that are critical in the real estate industry.”
Taylor Arnett, first vice president, acquisitions, CapRock Partners shared insight on how this pandemic will impact industrial, noting that although industrial lease and sale transactions have slowed down during the last few months due to uncertainty, he is optimistic that industrial will come out of this stronger than ever due to several demand drivers:
- Shelter-in-place orders have accelerated the growth and adoption of e-commerce. We expect a paradigm shift for retail where people will continue to shop online after the country and the economy reopen. A recent study by CBRE anticipates that up to 39% of retail sales will happen online by 2030.
- We anticipate that many companies will move away from the just-in-time inventory management system and increase their stockpiles in order to meet resiliency and redundancy needs. According to advisory firm RLCO, a 5% increase in total business inventories could translate to demand for an additional 500 to 700 million square feet of industrial space across the nation.
- Many companies with overseas manufacturing have experienced strong disruptions in their supply chain due to COVID-19. We expect some will want to move or complement overseas manufacturing with locations closer to American consumers. We might see a wave of nearshoring with companies moving production back to the Americas, or even onshoring in U.S. gateway markets (e.g. Southern California, Arizona, Texas) and other states with business-friendly regulations (e.g. Nevada).
Jo-E Lopez, vice president, Snyder Langston confirmed the impact on decision making. “This crisis came quickly and it challenged our firm to respond quickly. We had to get a an internal executive team together with the skill sets to respond quickly to handle the changing sets of guidelines and protocols, especially since as a contractor we’ve remained an essential business. So often we have the luxury of time and checks and balances when it comes to decisions for the company but we were forced to respond in much shorter timelines. That is a takeaway that will remain.”
She added, “We also embraced technology to accommodate speed of decision making and work from home demands. This advanced the use of tech for the industry overall by at least five years.”
“I also credit the hard work of our project superintendents. While some of us got to hunker down at home, they showed up every day at their jobsites – from day one. It’s a testament to the mentality and character of these individuals. It’s another positive aspect of this crisis in that the leaders and quiet champions in our firm really stepped up.”
While Greg May, west region managing director, Newmark Knight Frank, cites the newfound value of Peloton and HomeChef for making work from home easier, he also cited how technology is bringing people together stating, “Over the past few years our firm has grown exponentially with new brokers joining the firm across the country. This has given us an opportunity to connect people because it has forced us to quickly create relationships that would historically have taken a lot longer to develop. It’s been amazing to have these conference calls among brokers and clients, which allows brokers to hear from newly hired market leaders. It has really provided a place for brokers to share ideas and thoughts and get to be known by others.”
On whether we can return to the office, he noted, “How can you attract and hire the best and brightest, train them and mentor them, without a strong culture that is an integral part of the office environment. Maybe we won’t be in the office every day, but we still need that intersection of people, culture and collaboration.”