Real Estate: Green Street Advisors Talks Coronavirus and Real Estate
Leading real estate and REIT research firm Green Street Advisors has recently commented on the impact of the coronavirus on commercial real estate markets.
They note that that as recently as five weeks ago, no one was all that concerned with what the virus might do to real estate investment trusts balance sheet. That has changed quickly as the economic shut down to prevent the spread of the virus has altered both public and private real estate markets in a material fashion.
Green Street Advisors’ Research
Green Street notes that sectors that are the most exposed to the predicated significant drop in GDP, such as lodging, retail, and office, have seen significant declines in the price of publicly traded Real estate investment trusts. Since the publicly traded market tends to lead public markets by six months, this suggests substantial drops in the value of certain sectors of the commercial real estate market in the United States. Green Street indicates that the hardest-hit markets could decline significantly, with 30% declines in lodging and more than 35% in senior housing.
There are some positives, according to the research firm. They note that “Today’s banks are far better capitalized, which alleviates fears of a true credit crunch, and the “whatever it takes” mentality is so pervasive in the minds of policymakers that responses will be swift and aggressive. A financial crisis loosely akin to the Great Financial Crisis is more plausible than it seemed a few weeks back, but it is still unlikely.”
Green Street also suggests in recent research that financially sound real estate investors can put cash to work amid declining values. The current volatility presents a long-term opportunity.
Last month, the company said in a webinar that the U.S. economy is currently in a recession.
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