{"id":1004403251,"date":"2020-03-26T04:48:54","date_gmt":"2020-03-26T12:48:54","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004403251"},"modified":"2020-03-31T11:39:51","modified_gmt":"2020-03-31T19:39:51","slug":"2t-to-the-rescue-cre-and-the-stimulus-package","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/2t-to-the-rescue-cre-and-the-stimulus-package\/","title":{"rendered":"$2T to the Rescue: CRE and the Stimulus Package"},"content":{"rendered":"
\"\"<\/a>

John Worth, executive vice president, NAREIT. Image courtesy of NAREIT<\/em><\/p><\/div>\n

With the final approval of the unprecedented $2 trillion economic relief package in response to the COVID-19 pandemic<\/a>, it\u2019s timely to ask how that huge dose of financial medicine will help commercial real estate.<\/p>\n

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READ ALSO<\/strong>: NYC Owners, Service Union Agree on Coronavirus Relief<\/a><\/p>\n

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So, we did ask, and three CRE professionals gave us their thoughts on the scenarios that could unfold from the stimulus package.<\/p>\n

In a snapshot of where we are and a prediction on where we\u2019re heading without federal intervention, CBRE stated that \u201ca global recession likely has started<\/em>,\u201d with the U.S. seeing GDP declines in the first and second quarters. CBRE suggested, however, that the U.S. economy could stabilize in the third quarter and start recovering by the fourth. Along the way, though, unemployment could top 6 percent by mid-year.<\/p>\n

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Stay Tuned<\/strong>: CPE\u2019s Coronavirus Coverage<\/a><\/p>\n

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Those are big issues and big numbers. John Worth, executive vice president at NAREIT, pointed out that $2 trillion represents about 10 percent of U.S. GDP. \u201cThis is a tremendously large stimulus package\u2026. This is gigantic<\/em>.\u201d<\/p>\n

\u201cReal estate\u2019s performance is going to be a function of the underlying tenants<\/em>,\u201d he continued, and in the short term, especially so for multifamily. A key benefit of the stimulus package is that it should boost the ability of small businesses to reopen\u2014and quickly\u2014which will be crucial for most CRE sectors, Worth said.<\/p>\n

Unemployment claims for the week ending March 21 rose by 3 million from the previous week to 3.28 million, according to the U.S. Department of Labor figures issued today. Service industries\u2014lodging and food service–continued to account for most of the claims, but DOL reports, additional industries\u2014health care, social assistance, arts, entertainment and recreation, transportation, warehousing and manufacturing–are now showing significant job losses.<\/p>\n

\u201cThe most significant impact on commercial real estate from the $2 trillion bill will be the $500 billion in support from loans and loan guarantees<\/em>,\u201d for beleaguered businesses, such as those in the hospitality industry, said Brent Campbell, a real estate economist with Moody\u2019s Analytics, West Chester, Pa.<\/p>\n

Through its lending and other support to both small and large business, he added, \u201cthe bill will help blunt an expected uptick in delinquencies due to reduced foot traffic and overall declines in business activity.<\/em>\u201d<\/p>\n

As to the effects of the direct aid to U.S. households, Campbell said, some of that money will go to the essential retail outlets like grocery stores and pharmacies that state governments are still allowing people to access. Malls, however, \u201cwill still struggle, as foot traffic will not increase regardless of the consumer-side of the stimulus package, since many individuals \u2026 are still sheltering in place<\/em>.\u201d<\/p>\n

Worth agreed that the retail sector won\u2019t see a huge immediate benefit from the stimulus; the retail upside will be further down the road, once more stores can reopen. He does, though, expect retail to benefit from pent-up demand, especially from individuals whose incomes hadn\u2019t been diminished during the pandemic.<\/p>\n

Hotels might be the last CRE sector to bounce back, Worth said. \u201cMy sense is that business travel will come back quickly<\/em>,\u201d followed only later by leisure travel.<\/p>\n

A strong recovery<\/h2>\n
\"\"<\/a>

Richard Barkham, global chief economist & head of Americas research, CBRE. Image courtesy of CBRE<\/em><\/p><\/div>\n

\u201cAlthough the near term looks brutal, the medium-term outlook is more favorable because there are no structural flaws in the macro economy or in commercial real estate<\/em>,\u201d said Richard Barkham, CBRE\u2019s global chief economist and head of Americas research. \u201cThere are multiple signs that the economy and then commercial real estate will recover quickly once the virus\u2019s spread abates<\/em>.\u201d<\/p>\n

\u201cWhile there may be some commercial mortgage defaults, the Fed has put policies in place to ward off a credit crunch<\/em>,\u201d Barkham said. \u201cWe expect the U.S. economic trajectory to follow a sharp decline giving way to a rapid bounce back and then a solid, longer-term recovery<\/em>.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

The wartime-level legislation could shore up the economy\u2014and by extension the commercial real estate sector. Some experts weigh in. <\/p>\n","protected":false},"author":882,"featured_media":1004404843,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21825,23891,21742],"tags":[32789,48950,33034,41921,36309],"class_list":["post-1004403251","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-finance","category-national","category-latest","tag-cbre","tag-coronavirus","tag-moodys","tag-nareit","tag-richard-barkham"],"acf":[],"yoast_head":"\n$2T to the Rescue: CRE and the Stimulus Package - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/2t-to-the-rescue-cre-and-the-stimulus-package\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"$2T to the Rescue: CRE and the Stimulus Package\" \/>\n<meta property=\"og:description\" content=\"The wartime-level legislation could shore up the economy\u2014and by extension the commercial real estate sector. 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