Stewart Campbell Discusses COVID-19 Impacts on New York City

April 28, 2020

Stewart Campbell Discusses COVID-19 Impacts on New York City

April 28, 2020

The New York, New Jersey and Connecticut Tri-State area has been hit particularly hard with COVID-19 infections and deaths. While having to navigate the economic impacts of this tragedy, our regional property owners have also seen the health effects first-hand with their employees and property tenants.

Having worked through several major disruptions since 1993, I thought I had seen the full gamut of what this world can throw at us. However, this pandemic is unique in both its scale and uncertainty.

All-in-all this global pandemic has reminded us how interconnected our economy truly is, as no sector has been spared from the impacts. The question now is, where do we go from here?

The Year Ahead for New York

Renters and landlords depend on one another more than ever during these unpredictable times of crisis.

In New York City, many of our multifamily properties rely on a significant percentage of income from commercial—generally retail—tenants. In the Northeast, retailers with strong delivery logistics in the consumer staples, discretionary and food spaces are performing better than those without these delivery capabilities. Predicting what might happen with these tenants in the long-term, though, is a current challenge.

New York City, specifically, will need a strong private sector rebound to help the currently strained local and state businesses. In large part, we expect private sector strength to come from returned success across commercial real estate property types in the next six-to-12 months.

Commercial real estate, like all other industries, has been forced to adapt to quickly changing guidance, regulation and business interruption. For example, New York’s multifamily industry is among those which are still largely a traditional, in-person business. However, as the result of nationwide stay-at-home orders, multifamily investors and advisors have been forced to adapt to recent operational and business changes—like shifting to virtual property tours and video conversations.

I have always found working from home to be great for defensive work (loan packages, spreadsheets, administrative items), but harder for offensive work (marketing, client relations and new loan production). But throughout this pandemic, the multifamily industry, in particular, has proved me wrong.

The New York market’s ability to widely adapt to these changing requirements and still get deals done has led me to firmly believe that—despite this rather significant hiccup—the multifamily industry should remain healthy. That said, we anticipate potential added pressure on retail and office product as remote working populations and stay-at-home orders could remain for several more weeks.

Similarly, the New York hospitality industry has seen softening and interruption in day-to-day operations—namely as hotels, restaurants and other tourism-related businesses have been forced to shutter during this time. While we could see long-term impacts as companies rethink business travel, New York’s hospitality industry should rebound once shelter-in-place orders are lifted, reigniting travel, tourism, shopping and social activities.

Opportunities Will Come Again

For the industry, 2020 will be a year of reduced loan volumes, but also a year to solidify existing client relationships and forge new ones. We believe that our role as advisors is to provide support and be ready to help our clients anytime—not just when the market is flush.

Right now, we should aim to ensure that everyone—from ourselves, to our clients, colleagues and prospects—are financially well-positioned throughout and following this crisis. By providing current market intel on what lenders and loan products are available today and how current deals are being underwritten, we can help to arm our clients with the information that can best position all of us for this long-term success.

In times like these it is important to remember that no one has to go it alone. By banding together and considering both the human and business impacts, there is no mountain we cannot conquer if we approach the summit with a unified front.

Stewart Campbell, Senior Managing Director