Goldman Sachs has released a report detailing the economic impact of COVID-19.
Here are the key points from the COVID-19 impact report:
- Across the board, US REITs are under performing due to slowing demand, decreased financing opportunities, and tenant distress.
- With global travel grinding to a complete halt, the hospitality industry has suffered a downturn not seen before – many hotels are choosing to close their doors.
- Retail was already in distress pre-pandemic. Now, many retailers will be forced to close their doors completely unless they are able to transition online.
- Private real estate deals have slowed dramatically, with the debt capital markets also slowing to a halt.
- In multifamily, Class A assets saw the highest rent payments in April, with the percentage decreasing with class.
- The outlook is that most tenants will stay put, which will be good for occupancy rates, but new leases are unlikely anytime in the near future.
- There will likely be a return to more affordable pricing throughout the classes and those properties that provide high quality of life for low cost may see increased activity and profit.
While most clients are playing defensive rather than offensive, we will be playing the offensive to turn this crisis around. Resilience and ultra smart planning will be key to turning this economic downturn into profit down the line.