Sentiment Survey Looks for 2021 COVID-19 Vaccine
Predictions about recovery in 2021 are predicated on the idea that a vaccine will be available sometime during the year.
Commercial real estate executives’ outlook improved in the third quarter, though recovery is still expected to take many months if not years, The Real Estate Roundtable’s Q3 2020 Economic Sentiment Survey revealed.
The overall sentiment index was 42, reflecting ongoing challenges related to the coronavirus pandemic. A score over 50 is considered positive on the 1 to 100 point scale. The Q3 Current Conditions Index was 21, eight points more than Q2, while the Future Conditions Index ticked up one point to 63.
If a vaccine becomes available in 2021, respondents said the economy is likely to turn toward recovery, but the intervening months without a vaccine will continue to be difficult, according to the survey.
Real Estate Roundtable President and CEO Jeffrey DeBoer said public officials could take steps to improve matters.
“While a vaccine continues to be explored, it is imperative that Congress and the Administration soon come to an agreement on the next round of COVID-19 relief,” he said. “Extending added unemployment benefits, additional funding for the Paycheck Protection Program (PPP), and a rental assistance program to help impacted people as well as struggling small businesses is needed. Moreover, property owners, hospitals, schools and others need liability protection against frivolous lawsuits and businesses need assistance as they seek to cover new and unusual expenses related to safety and cleaning protocols.”
DeBoer said the sectors hardest hit by the economic effects of the pandemic include hospitality, senior housing and retail commercial real estate tenants.
“Other commercial real estate sectors, notably office and multifamily, also are facing challenges related to the overall economic hit from the health care crisis and are very cautious in their activities,” he said. “However, generally balanced CRE market conditions and responsible leverage prior to the crisis positions the industry to stabilize and move forward positively once a vaccine is available.”
Some survey respondents said they expect to see upsides in certain areas. Offices may need more space so that employees can spread out for social distancing, one said. Another predicted a period of “pent up demand” and high investment once people feel safe.
Predictions about recovery in 2021 are predicated on the idea that a vaccine will be available sometime during the year. Without that breakthrough, one survey respondent said the economy will persist with a “funky new normal” and a much slower recovery.
Respondents also reported that capital markets are challenging to access, especially in cases where there is no preexisting relationship with the investor.