A staple of IREM Summits, the AMO Outlook presentation went virtual this year, with participants providing their wide-ranging and insightful perspectives on both the current and mid-range state of the economy, the business, and even their personal coping skills as the COVID-19 pandemic rages on.
Providing those insights, and fielding audience questions throughout the lively exchange, were:
- Brad Ashley, CPM®, RPA, IREM Member-at-Large and Managing Director of Property and Facilities Management at Newmark Zimmer, AMO®, in Kansas City, MO;
- Dawn Carpenter, CPM®, IREM Senior Vice President and Founder of Dawning Real Estate Inc., AMO®, in Staten Island, NY;
- Nancy San Pedro, CPM®, Director of the California retail portfolio in Los Angeles for Equity Residential; and
- Waddell Wright, CPM®, CCIM, IREM Senior Vice President and Founder of W. Wright & Co., LLC, Nashville, TN.
Tapping into current trends, all participants reported a new round of COVID-19 surges at the top of the discussion. In fact, news broke that morning that in Carpenter’s region, there was a shutdown of area Catholic schools. All the presenters also reported a counter-cyclical trend of people frequenting what retail shops and restaurants were still open, often flouting the use of masks.
Such behaviors would do little to stem the resurgence of the virus and, as Ashley pointed out, “Retail tenants need more help. Adjustment to rents have become a necessity.” The difficult choice all panelists reported was whether to engage bankruptcy clauses in their leases or, in Ashley’s words, “keep them in there and keep the lights on for the good of the retail center.”
Which, as San Pedro noted, implied a “partnership between landlord and tenant.” Echoing a constant theme for IREM members throughout the pandemic, she opts for reasoned compassion, and told the audience that, whenever possible, “Let’s hit pause on rent demands and keep each other alive.” Again, the request for rent forbearance was a common situation for all four CPMs.
Naturally, it’s an approach that creates downstream challenges. Agreeing that as many accommodations as possible are called for in the current crisis, Carpenter noted that, “As a fee-based property manager, if the landlord doesn’t collect rent, I’m not collecting any fee.”
Carpenter told of a new assignment Dawning took over in March. Some 23% of the tenants at her new property aren’t paying rent. “Nevertheless, we’re making it work economically.”
As an asset manager, Wright explained that he’s seeing a lot of sidelined capital waiting for “deals to make sense. We’re in a holding pattern, monitoring delinquencies, since tenants can’t pay rent and we can’t evict.”
Ashley added that his firm recently signed a good-sized office lease, but it took a slightly different shape than leases a year ago. “Deals we make today have to take into account what the landscape will look like five years down the road, both in use and rent structure. The clients who can see that will be the most successful.”
With that in mind, San Pedro added that her firm has signed a handful of retail leases, an impressive twist on the current coverage of the retail sector. “I’d be remiss to say it’s all roses,” she said, “but it does indicate a path forward.”
Which brings us to the long-term outlook, as the panelists shared their views on how 2021 and the following year are likely to shape up, with panelists considering:
- Perspectives on the mid- and long-term economy
- Views on how local courts are handling evictions
- How property management professionals are employing their personal coping skills
To help you prepare for the dynamic world of real estate management, and whatever 2021 may bring, explore IREM Learning.