Demand for Real Estate and Energy Drops Due To Coronavirus, Beroe Analysis
Source: PR Newswire
RALEIGH, North Carolina, Jul 9, 2020 - Global economic activity has slowed sharply as a result of the coronavirus pandemic, and there has been a high impact on commercial real estate and medium-high impact on residential real estate, according to Beroe Inc, a procurement intelligence firm.
For the mining industry, extended transaction timelines and delayed launches are already evident in highly affected markets, however, technology will be used to connect parties and reduce some of the barriers to execution. The commercial real estate sector would see a major impact only after a few quarters of the outbreak.
The COVID-19 pandemic is causing massive disruption to landlords and tenants of commercially used spaces. Tenants in many developed and developing countries are trying to negotiate with landlords on payment of rent as some are facing economic hardships such as job loss and business slowdown. The U.S. market was in a stable state in terms of vacancy rates and rental rates by the end of 2019, however, vacancy rates are expected to increase from Q1 to Q2 2020. As with other regions, the vacancy rates in the APAC regions will also increase.
Beroe, which is based in North Carolina, further stated that procurement experts can access this report on market intelligence platform Beroe LiVE: live.beroeinc.com
Corporates may look to invest into communication technology and work from home models for employees over the long term, as the COVID-19 pandemic is expected to have long term effects with social distancing and other safety precautions becoming the norm. Working from home would eventually reduce the demand for office utilization rates in the long run. Flexible work space could be looked as a viable option when compared to fixed working spaces, as this could help in reducing potential operational expenditures.
The rental real estate market is expected to have a more short term impact compared to long term as a result of COVID-19. With the demand for real estate space expected to weaken further, buyers can take advantage of this situation, and move to prime locations for more competitive rates. The rental rates are expected to be flat to low, at least for the next few quarters, and buyers can make use of the situation to negotiate for a better deal.
- The coronavirus outbreak has both short-term and long-term impact on the commercial real estate sector. The short-term effects include the negative impacts on economic growth, business activity and to a certain extent on employee behavior, while long term effects are greater popularity of work from home models.
- There is a high impact of COVID-19 on corporate occupiers, offices, and industrial and logistics sectors. Health and well-being of employees along with business continuity plans are the major concerns for corporates.
- Automation and communication technologies can be looked into for investment compared to office space investments. As more companies move employees to work from home models, technology is a more useful investment in the long-term.
- As a result of the pandemic related shut downs, there is reduced activity in major ports and airports, further influencing the falling utilization rates and idle resources in the real estate and energy sector.
- For many companies, the long-term focus is on normalization of operations by returning to office spaces. Companies can look into renegotiation of current and expected future deals with landlords and insert force majeure clauses into the lease agreement.
- Suppliers are keeping customers and companies up-to-date, for example, Cushman & Wakefield are providing COVID-19 related global and regional information in multiple formats.
The research methodology adopted for the report included:
- Experts with twenty years of domain experience
- Interaction with buyers
- Inputs from supply chain partners
Affected by the coronavirus pandemic, globally, the unemployment rates are expected to increase 11 percent by mid-year, directly influencing the mining industry as demands for office space fall. Real estate suppliers are taking proactive steps to support the market in view of the expected demand drop. A global task force has been established by ISS to monitor daily situations, in order to help its customers, suppliers and employees to tackle the pandemic, while JLL is providing workplace continuity plans to organizations, for tackling COVID-19 challenges.
The report also includes:
- Real Estate and Energy
- Commercial Real Estate
- Residential Real Estate
- Pharma Industry
COVID-19 Impact Analysis:
- Corporate Occupiers
- Industrial and Logistics
- Regional Analysis
- Supplier Updates
- Key Initiatives
About Beroe Inc.:
Beroe is the world's leading provider of procurement intelligence and supplier compliance solutions. We provide critical market information and analysis that enables companies to make smart sourcing decisions—leading to lower costs, greater profits and reduced risk. Beroe has been providing these services for more than 13 years and currently works with more than 10,000 companies worldwide, including 400 of the Fortune 500 companies.
To learn more about Beroe Inc., please visit: http://www.beroeinc.com