The coronavirus pandemic has substantially disrupted the global economy in weeks, and there is a wave of uncertainty taking over the financial markets. While the impact will certainly be uncomfortable, according to Gary Mozer of George Smith Partners, but it won't be devastating.

"I don't think the outcome is going to be catastrophic, but this is going to be very uncomfortable for a while," Mozer, principal and co-founder at George Smith Partners, tells "The government has to step in—because there are too many people being affected—and they are starting with cheap money."

While it is difficult at this point to predict the severity of this event, it is clear that many people will lose their jobs, particularly in the travel and hospitality industries. Those job losses will have an inevitable impact on real estate across asset classes. "We have to go back to basics, and economics 101 is all about supply and demand. The main demand drivers for real estate are jobs," says Mozer. "We are going to see a lot of people in the service industry lose their jobs. People aren't going to go to hotels or travel, and people aren't going to go to certain types of retail shops. So, we are going to see a decrease in demand drivers, and that is revenue that sustains businesses that support real estate."

For now, the market is pausing to better understand the new dynamics and the level of risk. "I heard a great quote: 'When there is risk in a system, we can assign probability to certain out outcomes," says Mozer. "When there is total uncertainty, we freeze.' We are switching from greed to fear, and people are starting to retract to figure this all out. So, the market is going to freeze up for a while, and we are going to see the real estate economy slow to a crawl until we have some visibility into what is going to happen."

There isn't a freeze across the board, however. Some lenders are still actively placing deals—but those lenders are going to price with the new risk in mind. "Lenders putting money out are going to get paid for taking the potential risk of this marketplace," says Mozer. "They are going to quote wide, and they are going to make a lot more money on the deal. Things are going to be priced differently, but right now there is too much uncertainty for people to start making decisions."

As for advice to clients worried about making loan payments—particularly as tenants are forced to shutter—Mozer is recommending borrowers reach out to clients early. "I have told my clients to write a letter to their lender to see if they can go interest only or get accrual," he says. "I want them to be proactive instead of reactive. Some lenders are talking about it already, and some lenders are waiting to see what is going to happen. But, lenders can't foreclose on every piece of real estate."

Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.