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By: Richard Kendall
The COVID-19 pandemic has negatively impacted most every industry over the past few months, creating a scenario of rising financial stress, retracting employment and diminishing market confidence for companies around the globe. The commercial real estate industry hasn’t been immune from the pandemic’s downward pressure on the economy. Many real estate owners and investors, and the service-based companies supporting these organizations, have found themselves in a wait-and-see mode before making decisions about projects and other business initiatives.
To that end, according to a recent Bisnow story on data collected by independent research and advisory firm Green Street Advisors, real estate investment trust shares have decreased by 34% since mid-February, while office high-rises have experienced a 10% decrease in overall value across global markets. The same story notes unsurprisingly the retail sector has been among the most negatively impacted product types across the world’s commercial real estate portfolio.
Moreover, a Globestreet story from early April predicts the COVID-19 crisis could put further stress on an already severe housing shortage across the U.S. — especially for subsidized and affordable market-rate apartment homes. Many new projects, particularly those that haven’t yet gone vertical, have been put on hold, potentially for several months, until there’s more certainty in the financial and consumer markets.
By no means is all lost for the real estate industry. First, it’s important to note there are marked differences between today’s economic crisis and the Great Recession that forever changed the real estate industry some 12 years ago. What we’re experiencing now wasn’t initiated by a real estate event like the housing bubble in 2008. Rather, COVID-19 is a healthcare event that has largely put the global economy on hold until the Coronavirus “curve” can be flattened and significant progress can be made on a working vaccine. Just a few months ago, our economic fundamentals were strong — with record-low unemployment, robust investment and rapid absorption — and many industry experts believe that bodes well for a faster market recovery once COVID-19 is brought under control.
Secondly, market uncertainty always creates opportunities for smart, savvy and proactive companies to take a leadership stake in their markets, whether it’s communicating with their various stakeholders or marketing their brands in an authentic way to strategically position their companies for when the market fully returns.
Over the past several weeks, we’ve worked with our commercial real estate clients to navigate these unprecedented times with a wide range of communications strategies proving beneficial to their brands:
Crisis Planning + Response – When any crisis hits, the hope is that there’s been some planning in advance to anticipate the potentially negative impacts it will cause a company’s reputation and put in place some strategies that can offset brand risk among key audiences. Our Real Estate Team has collaborated with real estate companies of every size and type over the past several weeks to help them develop a suite of crisis-related materials, including:
Creative Earned Media – Engaging with the media during times of crisis carries a certain risk-reward element, and it’s not always beneficial to proactively pitch media on typical news stories, especially given their all-hands-on-deck approach to the COVID-19 pandemic. That said, real estate trades and business media have increasingly requested non-crisis-related articles about companies with unique stories to tell. There’s a growing sentiment among trade and financial outlets that readers want more coverage of business-as-usual transactions, like this story on a recent acquisition deal brokered by Colliers International or corporate profiles of companies like GIS International, global, full-service real estate firm with a collaborative approach to complex property development.
Strategic Thought Leadership – Crisis situations can often present golden opportunities for companies and their executive leadership to take an authoritative position in their communities on a wide range of issues – helping to build stronger brand loyalty and trust among their key publics. One way in which Allison+Partners helps its real estate clients in this capacity is through surveys and other data collection initiatives. Currently, one international real estate firm has instituted a multi-phased “Work from Home Survey” to gather insights from employees about how their workday has changed during the coronavirus pandemic – information it will share periodically with key target media. Another global real estate company, B+H Architects, recently provided third-party quotes for a trade story that shows how technology has supported its design-from-home activities on major commercial development projects. And international architecture firm Perkins & Will has taken a leadership role in consulting hospitals and other clients on the future of the healthcare environment in light of today’s coronavirus crisis.
Stakeholder + Community Engagement – The COVID-19 pandemic, and the resulting economic retraction, has created a host of problems in the commercial tenant market, with retailers, small businesses, nonprofits and many other users finding it difficult to pay their monthly rents. Many owners have responded positively by establishing rent-deferral programs to ease the pain. This includes Vulcan Inc., which announced last week it will not collect rent from 40 commercial tenants impacted by the crisis, across 30 real estate assets. Orange County, Calif.-based Irvine Co. also announced recently it will offer financial assistance to residential tenants experiencing coronavirus-related layoffs or losses to professional income.
If you lead a real estate company looking for help building a stronger communications message during these uncertain times, please contact me at email@example.com or sign up for our weekly COVID-19 updates.
Richard Kendall is a partner and managing director of Allison+Partners’ Real Estate Group. He has more than 30 years of experience consulting organizations in the built environment on a range of branding, marketing, PR and crisis communications initiatives.