GlobeSt. – It all depends on who you ask and how far out you look.
Daily Covid-19 cases have been continuing a steady rise since June 20. The current 7-day moving average as of July 14 at 33,292, or just above the first wave peak in April 2020, according to CDC data.
Given the mountainous 7-day averages of more than 251,204 on January 11, 2021, that may seem small. And there are more than 160.4 million people in the country fully vaccinated. However, the US population is more than 332.5 million with about 55.8% receiving at least one dose and 48.3% fully vaccinated. Despite this progress, the new Delta variant is speeding across the country and even leaving dead some who were supposedly protected.
That raises the question of whether the assumptions earlier this year of an economic rebound—some even predicted a super bounce—were premature.
Some CRE pros are fully confident.
“The fundamentals of consumer confidence, high levels of savings, and low interest rates continue to elevate economic performance,” Stephen Bittel, founder and chairman of commercial real estate services firm Terranova, tells GlobeSt.com. “Coupled with continued growth in government spending, it all bodes well for continued strong performance in our consumer-driven economy. The risk we face is a bursting bubble of the record high asset values from commodities to stocks.”
Tere Blanca, CEO of Blanca Commercial Real Estate of South Florida also tells GlobeSt.com that “our economy is on the move and companies are planning a return to the workplace by implementing creative, effective measures keeping health and wellness at the forefront.”
“National tenant demand for progressive, business-friendly markets like South Florida remains evident, and economic fundamentals, such as monetary conditions, jobs gains, falling unemployment and positive business surveys, remain strong,” Blanca continues.
Others, like Mark Fawer, a partner in the Real Estate practice group at Greenspoon Marder, are more nuanced. “Absent any new government restrictions, there really should not be any noticeable impact on commercial real estate,” he says. “That said, however, if the case numbers increase, it could inhibit international travel, for which cities like New York are dependent on tourists. That could impact the recovery of the hospitality industry that caters to foreign tourists.”
Reactions to upticks will vary from one part of the country to another, but Fawer also points to “a certain amount of Covid fatigue” and that “people are becoming, I think, a bit more inured to it.”
Projects that have started have faced long lead times, Fawer adds. “Short term case load data doesn’t really impact ground-up construction of a multifamily project or the planned reopening of a hotel under a new brand, say six or nine months for now,” he says. “Those projects are already in the works and won’t be affected by short-term new data. “I think the bigger impact on commercial real estate are going to be some of the long-term changing markets after the Covid experience,” like office sharing or people working from home. “That would be more impactful than the short-term blip of covid cases.”