Q1 2021 CRELA Webinar - "Has there been a Paradigm Shift in the CRE Industry?"
Work From Home has become more common over last 12 months. There are many examples of this but to mention a few: Shopify is letting its 7,000 employees work remotely, Aviva - the UK based insurance group - is instituting “Smart” working policy (closing some offices and allowing employees to log in from home and smaller redesigned offices), HSBC is predicting a 40% reduction in its office footprint, Lloyds is projecting a 20% cut in office space. On the other hand, you have David Solomon, CEO of Goldman Sachs, who is calling remote work an “aberration” that will not last.
What is your view on this? And how does that relate to shift in capital — are you seeing large investors moving capital away from office into Industrial or Multifamily assets? or do you think this is temporary and consumers would want to be back in the retail malls and plazas in person once vaccinations are completed?
With CAP Rates for Industrial and Multi Family at historic lows (once again), cost of land a record high, rental head winds due to covid, cost of material having gone up - where is the opportunity today and how are you making returns work? Are the investors simply accepting lower returns overall?
How have the rent recoveries been in your space? As the rent and wage subsidies end towards later part of the year, are you expecting conditions to improve or worsen? On one hand as a country our debt ceiling is setting new records every month but on the other hand it is also increasing saving rates exponentially. How is that going to impact your tenants and cash flows as the stimulus fades?