Originally published on May 22, 2020 by Jennifer LeFurgy, Ph.D.

Economist Douglas Holtz-Eakin Gives his Take on the U.S. Economy and the Government’s Unparalleled Response

The global coronavirus pandemic has wreaked havoc on the U.S. economy and caused disruptions of historic proportions. “We’re facing a very different crisis than the one in 2008, which was essentially man-made,” said Douglas Holtz-Eakin, Ph.D., an academic policy advisor, strategist and president of the American Action Forum, during a recent NAIOP Forums Exclusive webinar. “This is a completely different phenomenon.”

Holtz-Eakin noted the swiftness of the pandemic’s effects on the U.S. economy, citing record unemployment and the contraction of GDP by 4.8 percent in the first quarter of 2020. However, for the most part, he praised the federal response. He stated the Federal Reserve reacted appropriately to the crisis by essentially injecting cash back into the economy through its lending programs. “The Fed’s actions insulated the financial markets from the fallout of the coronavirus pandemic. Banks and other financial entities that have performed remarkably well in this environment and are well-capitalized and capable of executing their basic missions,” he said. “That wouldn’t have happened without the very, very strong, response from the Federal Reserve.”

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Originally published on May 20, 2020 by Alex Ford

As states begin to slowly reopen their economies, governments, businesses and the public as a whole are contemplating what a post-coronavirus America will look like. Some aspects of this “new normal” – such as limited capacity requirements in public spaces and stricter sanitation mandates, to name a few – are already taking shape. But with a cure potentially months or years away, who bears responsibility if a customer or employee contracts the virus? The question is yet another example of the unprecedented times in which we are living, and has emerged as a key wedge issue among various stakeholders.

At the federal level, debate over the next coronavirus relief package has centered on the inclusion of liability protection for businesses. “Companies doing their best to control the spread of this disease with the limited guidance available deserve legal protection. Congress should not allow good actors to be held liable for events beyond their control,” a group of more than 200 business associations and trade groups wrote in a letter to congressional leadership this month.

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Originally published on May 14, 2020 by Daniel Levison.

In this crazy pandemic world, do you feel comfortable that your business is operating efficiently? If not, and most of us don’t, the question we should ask ourselves is: How do we prepare our business to operate at maximum efficiency when another catastrophic event occurs or our economy is shut down again due to a shelter in place order?

If the medical experts are accurate, we could have a second wave and possibly another shelter in place ordered next winter unless a vaccine is developed. Whether it’s next winter or next decade, the question really isn’t if something like this will happen again, but when it will happen?

Our research indicates that most real estate business organizations have not yet invested significant time and resources to streamline their back-office operations. A study by Wells Fargo states moving away from desktop, paper-based processes and outdated systems improves productivity and increases accuracy. Automation initiatives can also make a positive impact on cash flow forecasting and budgeting which is especially important in today’s environment.

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Originally published on May 13, 2020 by Stephanie Friese, Christine Norstadt and Jennifer Garner for the National Real Estate Investor

The jury is still out for May income as landlords and property managers are still assessing the impact from their tenants’ payments. Office, industrial, and multifamily landlords will likely receive most, albeit with some shortfall, of rents because tenants in these sectors have not been affected as much as in the retail sector, where we are hearing reports that as many as 40-50 percent of retail tenants will not re-open.

Strategies to provide tenants with relief

Landlords must time the relief right. On the one hand, don’t rush. Investors need to make sure any relief is not in conflict with loan documents or is pre-approved by their lender(s). Many also believe we don’t yet know how long or short the recovery process will be and want to avoid the costs of multiple amendments. On the other hand, if recovery is going to be long, engaging with tenants early gives the landlord an opportunity to structure a relatively good deal with tenants, builds goodwill, and creates a basis to deny additional requests for relief from that same tenant if circumstances continue to worsen in the coming months.

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Originally published on May 18, 2020 by Elizabeth Brink and Arnold Levin

At Gensler, we’ve been thinking hard about how to help our clients through these extraordinary times. As we’ve adjusted to the strange reality of the global work-from-home experiment, our clients have begun to ask what the future of work holds post-pandemic.

In order to move forward, we must rethink past workplace design paradigms, mine the present situation for lessons learned, and create smart, scenario-based road maps for how, and when, we return to the office.

The Workplace Context

Originally published on March 2020 by Maria Sicola, Charles Warren, Ph.D., and Megan Weiner, CityStream Solutions, LLC.

Professionals commonly analyze and compare individual U.S. commercial real estate markets by dividing them into ranked tiers based on their investment potential or growth characteristics. Although the methodologies they use to create these rankings are broadly similar from one report to the next, each is slightly different. As a result, cities are ranked differently in different reports. This can sometimes lead to confusion as industry participants sort out which markets are the best candidates for new investment. Adding to the potential for confusion, different analysts use different terms (e.g., “Tier 1,” “Primary,” “24-hour,” “Gateway”) to describe which markets they think are the top markets in the industry.

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House Speaker Nancy Pelosi and top Democratic leaders are working on a bill that could spend as much as $2 trillion more on coronavirus relief. A significant portion of that will be directed toward states and local governments, which are suffering a loss of tax revenues because of ongoing shutdowns.

Other priorities include an expansion of unemployment insurance and additional funding for the U.S. Postal Service. The bill could also include spending on infrastructure.

While House Ways and Means Committee Chairman Richard Neal (D-MA) told local leaders that he supports spending on infrastructure as one way to help state and local governments stimulate their economies, Senate Majority Leader Mitch McConnell (R-KY) said he opposes that. “Infrastructure is unrelated to the coronavirus pandemic that we're all experiencing and trying to figure out how to go forward,” McConnell said.

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Originally published by Phil Jelsma for Commerical Property Executive

The coronavirus outbreak has prompted multiple deadline extensions by the Internal Revenue Service, many of which have major implications for commercial real estate investors.

On Thursday, April 9, the IRS issued Notice 2020-23, which extends several time-sensitive tax deadlines including those for Section 1031 Exchanges and Opportunity Zone Investments.

In a Section 1031 exchange, which allows deferral of capital gains taxes on the sale of certain investment properties, an investor who sells real estate held for productive use in a trade or business or for investment can defer taxes if the investor identifies replacement properties within 45 days of the sale and within 180 days of the sale completes the acquisition of one or more replacement properties. The new IRS guidance extends both the 45-day deadline and the 180-day deadline, if those deadlines would have expired on or after April 1, 2020, to July 15, 2020. Thus, if the investor’s identification period was open as of April 1, 2020, it is automatically extended to July 15, 2020. Similarly, if the 45‑day identification period had expired before April 1, 2020, but the 180-day exchange period was open as of April 1, 2020, the 180-day exchange period is extended to July 15, 2020. This creates some interesting situations.

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The CLT Development Center continues to maintain plan review, permitting, and field inspections as allowed by the stay-at-home order. For the last weeks, we continue to make modifications to the ways we deliver services to protect customers, staff, and the community. 

Requests and scheduling for virtual meetings for urban and commercial pre-submittals continue to be offered. Please contact Nan Peterson, Business Relation Manager, [email protected], or 980-264-9580 with questions or inquiries. 

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Last week, the White House issued an outline containing a three-phase approach for states to follow as they move to restart activities following the coronavirus pandemic. Before a state moves forward, the administration said it should be seeing a downward trajectory of influenza-like illnesses and COVID-like syndromic cases reported over two weeks.

As states reopen, the plan recommends they have plans to:

• Protect the health and safety of workers in critical industries.
• Protect the health and safety of those living and working in high-risk facilities (e.g., senior care facilities).
• Protect employees and users of mass transit.
• Advise citizens regarding protocols for social distancing and face coverings.
• Monitor conditions and immediately take steps to limit and mitigate any rebounds or outbreaks by restarting a phase or returning to an earlier phase, depending on severity.

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Originally published in the Spring 2020 Issue by Trey Barrineau

Surging demand for e-commerce grocery deliveries could spark more construction of refrigerated facilities.

In October 2019, Amazon announced that it will begin offering free two-hour grocery delivery to Amazon Prime members. The move could have a dramatic impact on demand for cold storage facilities, which were already poised for strong growth amid changing consumer preferences.

CBRE’s “2019 U.S. Food on Demand Series,” which focuses on research about cold storage, notes that owners and operators of U.S. cold-storage warehouses should see annual growth of 4% from now to 2022. Evolving consumer behavior is driving this change. The Food Marketing Institute and Nielsen predict that groceries ordered online will account for 13% of total grocery sales by 2022, up from 3% in 2018. Additionally, the Food Marketing Institute predicts that within the next 10 years, 70% of American households will regularly do some grocery shopping online.

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Originally published on May 5, 2020 by Rich Tucker 

At the beginning of the year, nobody predicted the economic slowdown caused by the coronavirus pandemic. On March 1, the economy seemed to be thriving with record-low unemployment and a booming stock market. Two months later, the economy is in a deep freeze, and everyone wonders how quickly, and how thoroughly, it can thaw out.

For many of NAIOP’s Developing Leaders, those 35 years of age and under, this is the first slowdown of their professional lives. Luckily, NAIOP includes many veteran leaders who’ve come through crises before; more than 600 DLs joined a recent NAIOP webinar to hear advice from industry power players.

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Originally published on April 28, 2020 by Mecklenburg County

Mecklenburg County, the City of Charlotte and the six county towns, have agreed to follow the State of North Carolina's Stay at Home Order starting April 30.

Mecklenburg County Manager Dena R. Diorio announced the agreement to the Board of County Commissioners at its public policy meeting Tuesday afternoon, one day before the county's current order was set to expire.

"The unified coalition of the County, the City, and the towns that began working together when this crisis started will stay together," said Diorio. "We have agreed to proceed like the rest of the state as the phased reopening proceeds."

Mecklenburg's Stay at Home Order began March 26 and is more restrictive than the state order regarding certain businesses—including car dealerships, landscaping services, real estate brokerage, and other businesses not considered essential.

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Originally published on April 14, 2020 by Marc Rapport for MillionAcres.com 

The coronavirus pandemic has wreaked havoc on Americans' health and on their businesses. April 1 marked the first major due date for rent for millions of enterprises large and small, and reports from around the nation show that many simply couldn't make do.

Unlike the morbid updates from Johns Hopkins University, there's no daily body count of lost businesses, but reports of unpaid April rent have popped up around the country, along with accounts of how landlords and tenants are dealing with the sudden collapse of a huge chunk of the American economy.

The news reports recount the good, the bad, and the opportunistic -- including tenants reportedly seeking the help they may not need and landlords taking advantage of the situation to run-off long-term tenants in favor of new businesses with deeper pockets and expansion plans.

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Originally published in April 2020 by Marcus & Millichap

Section 1031 of the Internal Revenue Code enables real estate investors to defer capital gains on income-producing property when those gains are used to acquire a like-kind investment. Colloquially, a 1031 exchange is the transaction in which an investment property is liquidated and the proceeds from the sale, including capital gains, are used to acquire additional income-producing property or properties. For the exchange to meet IRS standards, buyers have 45 days from the initial sale to identify a replacement property of equal or greater value and 180 days to acquire that asset.

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The House and Senate aren’t scheduled to reconvene until early May; however, lawmakers are negotiating at a distance to reach an agreement to provide more funding for the Paycheck Protection Program (PPP).
 
Their tentative deal would invest another $310 billion into the program, with $60 billion allocated specifically for rural and minority groups and $60 billion for the Economic Injury Disaster Loan program. The agreement would also add $75 billion for hospitals and $25 billion for testing, for a total of $470 billion in additional spending.
 
PPP is a loan program ran through the Small Business Administration. It ran through its initial $349 billion last week after just two weeks of making loans. NAIOP and its allies in the real estate community-supported PPP and the law that created it, the $2.3 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted last month to help the economy survive the coronavirus shutdown.

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Even with no in-person events on your schedule, you can continue to build professional relationships right now – you may just need to think creatively during this unusual time.

In a recent NAIOP Advantage Series webinar, networking strategist Lori Saitz, CEO and founder of Zen Rabbit, shared ideas for making meaningful professional connections, whether you are looking to touch base with people you’ve met in the past or would like to expand your network to reach new customers.

“One of the main reasons that people go to events and conferences – apart from the learning, certainly – is for the networking,” Saitz said.

She started by defining the term. What is networking? “Starting a conversation – the foundation for building a relationship,” according to Saitz. “But now that we can’t go to events to do that, how can we still make that a part of our business?”

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Originally published by Heath Abramsohn in the Spring 2020 Issue

The Rockefeller Group Logistics Center in Piscataway, New Jersey, opened in October 2019. It marked the culmination of four years of collaboration between Piscataway Township, Middlesex County and the companies involved with the project. With five buildings totaling 2.1 million square feet across 228 acres, the effort transformed a former brownfield site into a productive asset that should create more than 1,500 permanent jobs.

However, for the commercial real estate industry, an especially newsworthy aspect of this $250 million project could be the introduction of a concept that has the potential to revolutionize the way developers and users approach industrial space.

One of the park’s five buildings will not only be LEED Platinum but will go a step beyond by seeking WELL certification. Once certification is complete, it will be only the second WELL-certified U.S. industrial building, and the first such building in the world to achieve both LEED Platinum and WELL certifications. That means that the facility is not only energy efficient and environmentally friendly; it is also healthy for the people who work there.

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• Cabarrus County Order
• Mecklenburg County Order
• Clarifications for Essential Businesses
• Clarifications for Real Estate
• North Carolina Order

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