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How the Coronavirus Recovery Is Changing Cities

Originally published by Bloomberg CityLab on June 22, 2020.

As cities emerge from coronavirus lockdowns, the way people use parks, stores, restaurants, transit, streets and homes is changing in ways both subtle and dramatic.

If one thing is certain, it's that our definition of normal has changed. After months in lockdown to prevent the spread of the coronavirus, cities are reopening — some with masks and social distance, others with still growing numbers of infection. It’s unclear what cities will look like in a year or more, but in many areas the landscape is already starting to shift.

North Carolina Phase 2 Extended Three Weeks; Statewide Requirement for Face Coverings Added

Originally published by the Real Estate & Building Industry Coalition

Governor Roy Cooper announced yesterday that as trends move in the wrong direction, North Carolina will remain in Phase 2 for three more weeks. Executive Order 147 also requires face coverings in public and at various business settings where individuals cannot maintain a physical distance of six feet from others.

Construction sites are specifically included:

7. In Certain High-Density Occupational Settings Where Social Distancing is Difficult. Social distancing is inherently difficult where multiple workers are together in manufacturing settings, at construction sites, and in migrant farm, other farm, and agricultural settings. Therefore, in businesses or operations within North American Industry Classification System (NAICS) sectors 311 to 339 (manufacturing), 236 to 238 (construction), and 111, 112, 1151, and 1152 (agriculture), all workers must wear Face Coverings when they are or may be within six (6) feet of another person.

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Kilroy Realty Named NAIOP 2020 Developer of the Year

Originally published on June 22, 2020 by NAIOP.

NAIOP, the Commercial Real Estate Development Association, has selected Kilroy Realty Corporation (NYSE: KRC) as the 2020 Developer of the Year – the association’s highest honor. The award will be presented during NAIOP’s CRE.Converge conference in Las Vegas this October.

“On behalf of my colleagues at Kilroy, I would like to thank NAIOP for this prestigious award. This recognition is reflective of the talent, drive and collaborative spirit of Kilroy. As a team, we continue to push commercial real estate forward by delivering thoughtful and innovative work environments that support the most dynamic companies in the world,” said John Kilroy, Chairman and CEO of Kilroy.

Kilroy Realty Corporation is a publicly traded real estate investment trust and member of the S&P MidCap 400 Index with over seven decades of experience developing, acquiring and managing office and mixed-use projects. The company’s innovative approach to sustainable, modern work environments helps drive creativity, productivity and employee retention for some of the world’s most influential digital media, entertainment, health, research, science and technology companies.

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How COVID-19 Could Inform The Future of Medical Office Design

Originally published on June 9, 2020 by Chris Barnet in DMagazine.com.

Imagine the last time you went to the doctor. You likely rode up an elevator and sat in a lobby or waiting room, elbow-to-elbow with other patients. You probably filled out paperwork, either with a pen and paper or maybe a touch screen device. Unless you were sick, you probably didn’t wear a mask.

The next time you go to the doctor, the experience is likely to be quite different. As a result of COVID-19, how medical office space—and office space in general—is used is going to change.

As physical offices are beginning to reopen and elective procedures are allowed, we are starting to have a better understanding of what a doctor’s visit could look like in the future.

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Navigating a Safe Return to Work: Best Practices for US Office Building Owners and Tenants

Originally published by Shawn Moura, Ph.D., Director of Research at NAIOP in June 2020.

Measures to contain the coronavirus outbreak temporarily slowed economic activity and dramatically reduced occupancies at many commercial buildings. As state and local governments outline plans for a phased reopening of the economy, office building owners and employers are formulating plans that will allow employees to return safely to work.

This research brief provides an overview of best practices in improving safety against the coronavirus for building owners and employers. It focuses on immediate measures to improve building safety. A future research brief will address longer-term implications of the coronavirus outbreak for building operations. The brief draws from guidance provided by the U.S. Centers for Disease Control and Prevention (CDC), Cushman & Wakefield and JLL; insights provided by Gensler staff in a recent NAIOP webinar; and recent media reports.1 Readers should consider referring to individual guides and to the CDC website for additional recommendations.

Best Practices for Building Owners

Reopening Buildings

Owners of buildings that have been partially or entirely vacated during the outbreak need to complete several tasks to ensure that buildings are clean, safe and in good working order before reopening.

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Washington Continues Work on Coronavirus Response

Originally published on June 16, 2020 by NAIOP.

After weeks of pumping the brakes on a so-called “phase four” coronavirus relief bill, the White House recently signaled its interest in moving an additional legislative package, provided it includes certain priorities.   

In an interview last week, trade adviser Peter Navarro sketched out the Trump Administration’s vision: a $2 trillion bill, with incentives for companies to “bring back” manufacturing jobs, and a “critical” payroll tax cut. A relief bill of that size would bridge the gap between the $3 trillion House-passed The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, and a $1 trillion version that Senate Majority Leader Mitch McConnell (R-KY) has called for.  

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Charlotte Water Advises Clearing Water Lines in Unoccupied Buildings

Buildings and businesses that have been closed (or open at reduced capacity) for a prolonged period have reduced water usage, potentially leading to stagnant water inside building plumbing that could become unsafe to drink. Businesses should take steps to flush the building’s plumbing before reopening.

Clearing the water lines, known as flushing, can be done by running the tap water for an extended period in the building. The goal is to turn over the water left in the pipes with fresh, clean water from the public water main. This process will clear the stagnant water when reactivating dormant plumbing systems and ensure the water in the building is safe as well as taste and odor-free before the resumption of regular water use.

Depending on the scale and type of facility, the process of flushing the lines could vary drastically. Charlotte Water recommends that individual entities research guidelines that pertain to their respective industries and buildings. You can learn more by reviewing Charlotte Water’s website. Resources will be updated continuously.

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WATCH: The Impact of COVID-19 on Real Estate Valuation and Leasing Webinar

The economic disruptions from COVID-19 have had significant impact on the credit quality of tenants, building occupancy and demand from buyers, resulting in substantial uncertainty in the valuation of commercial real estate and complexity in the accounting for lease modifications.

John Thomas, CEO of Physicians Realty Trust, and Dennis Power, CFO of the Opus Group, shared their experiences with tenant collections, lease concessions, market demand, and the resulting impacts on real estate valuation across their market niches. Brent Maier provided his view on the impacts he has seen in his role as the leader of Baker Tilly’s real estate transaction advisory services team while Mike Kamienski and David Jamiolkowski, also from Baker Tilly, shared their view of how these issues will impact financial reporting from a real estate impairment and lease accounting perspective. Don’t miss this discussion of critical topics so you understand the valuation and leasing impacts from COVID-19.

Click Here to Watch Webinar

Preparing for a New Normal in Commercial Real Estate

Originally published on June 5, 2020 by Shawn Moura, Ph.D. 

The coronavirus pandemic has accelerated social and economic changes that were underway before the outbreak, while also leading consumers, workers and employers to adopt new preferences and behaviors. Collectively, these changes will require that commercial real estate firms adopt new approaches to design, customer relations and business operations to be successful in the future. Christopher Lee, founder and CEO of CEL & Associates, offered his predictions for how the outbreak will reshape demand for commercial real estate in the U.S. and outlined steps that firms can take to remain competitive during a recent NAIOP webinar.

Lee observed that the commercial real estate market is currently about halfway through a downturn. Although the Federal Reserve’s intervention in credit markets and fiscal stimulus measures have mitigated some of the outbreak’s effects on the economy, “all of that is going to burn off fairly soon unless another economic stimulus comes forward.” Substantial economic uncertainty and fears about the coronavirus have paralyzed decision-making in most markets. Buyers are concerned about the pandemic’s effects on building revenues and expenses as well as potential liabilities from infections, and some may no longer be able to secure favorable financing for an acquisition. Sellers are uncertain whether they should sell now or wait out the pandemic, and are unsure whether they will have good options for investing the proceeds of a sale.

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10 Renovations to Consider Before Reopening the Office

Originally published on June 3, 2020 by Clay Edwards

As offices are set to reopen across the country over the next few months, many companies are considering all their options to make the workplace as safe and healthy as possible for returning employees. Companies will need to do more than put hand sanitizer dispensers everywhere and rearrange desks to put employees’ minds at ease.

Regardless of whether your company is heading back into the office ASAP or still managing a remote workforce, there’s still time to make updates with no or little disruption. At Skender, we’re actively collaborating with our clients to modify density and employee circulation to meet social distancing guidelines, and we’re seeing installations and renovations of all sizes. Here are 10 office updates that we’re recommending to support a healthy return to work...

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Join NAIOP & Receive FREE On-Demand Courses Through August 1

NAIOP provides critical commercial real estate education, connections and advocacy that help our members’ businesses and the industry advance. Members benefit from the resources and networking provided by both NAIOP Charlotte and the 20,000-member-strong North American association. Take advantage of the full scope of member benefits, including FREE on-demand courses through Aug. 1!

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Changes for Paycheck Protection Program, Opportunity Zone Guidance, and Action on Infrastructure

Originally published by NAIOP on June 9, 2020.

Last week, the Senate unanimously passed the Paycheck Protection Program Flexibility Act of 2020 (H.R. 7010). The legislation eases a number of requirements that must be met in order for PPP loans to be forgiven. Notably, H.R. 7010 extends the “covered period” during which PPP loans must be spent on eligible funds, from 8 to 24 weeks, and allows recipients to use up to 40% of loans on non-payroll expenses, up from the previous cap of 25%. Shortly after passage, President Donald Trump signed the measure into law. 

Recognizing the impact the COVID-19 outbreak has had on businesses, the Treasury Department also took action on Thursday, releasing new guidance that offers relief to Opportunity Zone (OZ) investors. As a result, individuals and firms will be granted additional time to roll qualified gains into an OZ fund and can avoid penalties if “reasonable cause” is demonstrated. 

NAIOP May Coronavirus Impact Survey Reveals Modest Improvement in Conditions for Development

Originally published on May 27, 2020  By Shawn Moura, Ph.D. 

Last week, NAIOP conducted its second survey of its U.S. members on how the coronavirus has affected their businesses and local markets. The survey results reveal the continued effects of the outbreak and how commercial real estate firms’ response to the outbreak has evolved since April. Although conditions are broadly similar to those in April, the results reveal a moderate rebound in acquisitions and new development and a modest decline in the outbreak’s effects on current development projects.

The survey was completed by 461 NAIOP members between May 18 and 20, 2020. Respondents represent a range of professions, including developers, building owners, building managers, brokers, lenders and investors.

Below is an overview of the survey results with direct quotes from the participants (in italics) followed by key data from the survey and a profile of respondent characteristics. Results from April’s survey can be found here.

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Board Insights

During April 17, 2020, NAIOP Charlotte Board Meeting, the following market perspectives were offered from board members:

  • Construction continues to proceed. Seeing smaller work crews on-site, but not slowing progress. Not seeing material issues at this time. New deals, if capitalized, are moving forward.
  • Developer and investors are hoping construction pricing to decrease as much as 20% but the construction industry is saying maybe 2%.
  • Seeing construction lending delayed by 30‐60 days due to banks focusing on PPP.
  • Big picture – Charlotte is still looking good to pull out of this when the time is right.
  • “Uneven” based on product type and where a project is in the process.
  • Retail is brutal. The only tenants that haven’t requested rent relief are grocery stores, drug stores, and quick-serve restaurants. Each answer is different. We need to look at the space and how we continue to provide a new experience in the retail of the future.
  • After this, we will have a greater realization that we create community – not sure brick and mortar retail will be dead.
  • On Monday (4/20), City will hold their first virtual rezoning meeting which will include public input through council members, chat, speaking upon appointment. No decline in zoning or permitting applications.
  • C‐4 is a new coalition of general contractors on a call twice a week with city and county (maybe 80 people on each call). As a group, developed best practices for a safe environment.
  • Many hotel owners are closing their location or 5‐15% occupancy.
  • Not seeing distressed sales yet.
  • In corporate America, how well offices adjust for future remote working? They are seeing some indications of 10% of remote workers to 30% remote workers. Corporations looking at hoteling and new design features. Will the old‐fashioned suburban office park may come back? New projects, looking at touchless entry for security and door entry.
  • WELL program – thinks that may have a good opportunity for a future program.

New Report: COVID-19 Predicted to Decrease U.S. Office Demand

The NAIOP Research Foundation has published the NAIOP Office Space Demand Forecast for Q2 2020.

Key Takeaways:

  • Due to the turmoil in the national economy, rising unemployment and continued uncertainty about future work arrangements, the U.S. office market absorption is forecast to decline into negative territory through the second quarter of 2021.
     
  • The steepest declines may be experienced in the third quarter of 2020, with NAIOP's model forecasting a drop of 16.3 million square feet. Absorption rates will increase as the economy begins to gain traction in 2021.
     
  • While the economic benefits of density and agglomeration are well-documented, COVID-19 may necessitate a type of "de-densification" in office space, at least in the near term. As a result, current office-using space will face short-term logistical challenges.
     
  • While U.S. states begin the process of a staged re-opening, employees will arguably put a premium on workplace cleanliness. They will also put a premium on personal space, which may contribute to increased demand for office space.
     
  • Many large organizations have begun to consider a "hub-and-spoke" model for work arrangements, enhanced by technology that allows for the economic gains from agglomeration while recognizing the challenges created by the pandemic.
View the full report.

WeWork and Airbnb: A Tale of Two Disruptors

The companies represent different approaches to the future of real estate, and their success or failure will offer important lessons to landlords.

The collapse of WeWork’s $47 billion valuation was the most exciting real estate story of 2019. Landlords, lenders, customers and competitors watched in awe as the company crashed into a wall of scrutiny and ridicule. In 2020, Airbnb might offer a similar spectacle, with a $35 billion valuation and a growing number of questions about the company’s long-term prospects.

What propels both companies? The changing needs of end users and the growing appetite of venture capital investors to disrupt the way real estate assets are operated and transacted. Both trends will keep transforming the industry, regardless of the struggles of WeWork or Airbnb.

A Time of Transformation

The global economy is awash in capital. According to data from PitchBook and the National Venture Capital Association, venture capital investments reached an all-time high of $131 billion in 2018, exceeding the heyday of the dot-com bubble. Elsewhere in the financial world, the amount of capital available to institutional money managers is also at an all-time high, according to data from Preqin and Ernst & Young.

In theory, investors only want to fund “real” tech companies that have high margins, can scale quickly and operate in industries that are easy to disrupt. In practice, the industries that could be easily transformed by technology — media, business processes, financial brokerages — have already been transformed. As a result, investors are venturing further up the risk curve, seeking out companies that want to disrupt other, more challenging industries such as real estate, health care and mobility.

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The Impact of COVID-19 on Real Estate Valuation and Leasing Webinar

Date: Thursday, June 11, 2020
Time: 2:00PM/EDT

The economic disruptions from COVID-19 have had significant impact on the credit quality of tenants, building occupancy and demand from buyers, resulting in substantial uncertainty in the valuation of commercial real estate and complexity in the accounting for lease modifications.  John Thomas, CEO of Physicians Realty Trust, and Dennis Power, CFO of the Opus Group, will share their experiences with tenant collections, lease concessions, market demand, and the resulting impacts on real estate valuation across their market niches. Brent Maier will provide his view on the impacts he has seen in his role as the leader of Baker Tilly’s real estate transaction advisory services team while Mike Kamienski and David Jamiolkowski, also from Baker Tilly, will share their view of how these issues will impact financial reporting from a real estate impairment and lease accounting perspective. Don’t miss this discussion of critical topics so you understand the valuation and leasing impacts from COVID-19.

Speakers:

Mike Kamienski, Partner, CPA, Baker Tilly
David Jamiolkowski, Partner, CPA, Baker Tilly
Brent Maier, Managing Director, Baker Tilly
Dennis Power, CFO, Opus Group
John Thomas, CEO, Physicians Realty Trust

Click here to register

C.D.C. Recommends Sweeping Changes to American Offices

Originally published by Matt Richtel on May 28, 2020 for The New York Times.

Upon arriving at work, employees should get a temperature and symptom check.

Inside the office, desks should be six feet apart. If that isn’t possible, employers should consider erecting plastic shields around desks.

Seating should be barred in common areas.

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June 15 Virtual Lunch With A Leader - Economic Development Pipeline

Economic Development Pipeline
Monday, June 15, 2020 | 12:00 – 12:45pm | Zoom Meeting
 

Grab your lunch and join this Lunch with a Leader virtually. During this webinar, hear about the various activities of our economic development organizations today. Are businesses looking to relocate to a warmer climate and different lifestyle? Is this our opportunity to thrive with relocations and expansions as businesses onshore more operations? What type of outreach and marketing campaigns are being developed to encourage interest?

 
Our Leaders
Tracy Dodson
City of Charlotte
Tracy Dodson

Robby Carney
Cabarrus Economic
Development Corporation

Donny Hicks, CEcD, CCIM
Gaston County Economic
Development Corporation
 
 
You are invited to submit questions in advance here.
 
 
Registration
This event is offered to NAIOP Charlotte members only at no charge. Prior registration is required. Zoom login information will be sent two (2) hours prior to the event.
 
 

Questions
If you have questions about the Virtual Lunch With a Leader, please contact the NAIOP Charlotte office at [email protected].

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