As we passed the six-month mark since COVID shut down the economy, commercial real estate transactions are starting to pick up, according to NAIOP’s latest monthly survey of its US members on the impacts of COVID-19.

In September, more respondents told NAIOP that they had witnessed more industrial, office and multifamily deals than in the month before. Industrial is seeing more activity than other CRE sectors, with an increase in both transactions and new development activity. In July, less than 50% of industrial respondents reported seeing new development activity. Now that number is up to almost 60%.

Overall, deal activity has improved substantially since April. Half of the respondents reported seeing no industrial deals and two-thirds reported no office or multifamily activity. All three sectors are better positioned than retail, where 79.8% of respondents reported seeing no deal activity.

While development activity is increasing, delays are still an issue. Seventy-two percent of respondents reported problems with delays in permitting and entitlements. Supplies (42% of respondents) and delays due to worker absenteeism or shortages were also issues (32% percent of respondents).

As deal activity increases across most sectors, rent collections are uneven. In industrial, 90.4% of respondents reported collection rates of 90% or more. Office operators hit a slight setback in September as only 74.1% of respondents reported 90% or more on-time collections. In August, 83.4% of respondents reported 90% or more on-time collections. Additionally, they saw an increase in rent relief requests, according to NAIOP. 

Retail showed a slight improvement in September, but it is struggling. Fewer than a quarter of retail respondents reported that more than 90% of their tenants paid their rent on time and in full.

NAIOP’s survey revealed that 72.6% of building owners and managers are delaying rent payments and amortizing them over the remainder of the lease, which is the most common relief offered. In August, 46% of respondents provided tenants rent relief in exchange for a longer-term lease. In September, 61.3% provided that option. Additionally, 48.1% of respondents reported offering rent adjustments, increasing from 34.0% in August.

“These changes may indicate that tenants need longer-term arrangements than a deferral can provide,” writes NAIOP Research Director Shawn Moura. “Some building owners may also be offering tenants additional forms of rent relief to maintain occupancy rates in a softening rental market.”

In September, 37.1% of respondents reported that they closed a property when an occupant tested positive for coronavirus, which increased from 24.5% posted in August.