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By Kerry Smith<\/div><\/div>\n

Investors save money during boom times to buy distressed property when things slow, but what\u2019s a post-pandemic bargain? Should they buy offices or retail? It\u2019s not clear.<\/span><\/span><\/p>\n<\/div>\n

MELVILLE, N.Y. \u2013 Commercial real estate investors are raising funds to acquire distressed assets, but even with cash in hand, what should they focus on?<\/span><\/span><\/p>\n

Long-term speculation on changes brought about by COVID-19 aren\u2019t clear yet, and these investors face uncertainty about the retail, office and hospitality sectors, says Doug Greenspan, a managing director at A&G Real Estate Partners, during a recent Turnaround Management Association (TMA) webinar.<\/span><\/span><\/p>\n

\u201cOne scenario is that many people will go into the office for just a couple of days a week,\u201d says Greenspan. \u201cEven if that\u2019s just 10 or 15% of workers, you\u2019re talking about far-reaching effects on the demand for space and, in turn, the value of office assets.\u201d<\/span><\/span><\/p>\n

The webinar, sponsored by TMA\u2019s Central Texas chapter, focused on the effects of Covid-19 on real estate. Greenspan, whose firm is providing real estate services and advice to the likes of DSW, Ruth\u2019s Chris, IT\u2019S SUGAR, and Cin\u00e9polis, talked at length about retail.<\/span><\/span><\/p>\n

\u201cUnderlying issues that were visible in retail pre-Covid really came to a head with the onset of the pandemic,\u201d he told the audience. \u201cRetailers that were on everyone\u2019s watchlist have since filed for bankruptcy. Our own Chapter 11 client list now includes, among others, GNC, Pier 1, Ascena Retail Group, Tailored Brands, Tuesday Morning, Modell\u2019s, Stage Stores and Nieman Marcus.\u201d<\/span><\/span><\/p>\n

Before the pandemic, the growth of internet shopping affected foot traffic at malls and stores, which impacted sales-per-square-foot productivity, even in historically strong retail markets. \u201cIn the fall of 2019, we were seeing retail rents decline in just about every submarket in New York City,\u201d said Greenspan. The accelerating shift is now spurring some retailers to speed up the implementation of what were formerly medium- or long-term plans to ramp up their ecommerce platforms.<\/span><\/span><\/p>\n

Companies that can ramp up internet sales to balance a decline in their brick-and-mortar locations \u201care already reaping the dividends,\u201d Greenspan said. \u201cThe trend is so pronounced that it is fueling strong pricing for fulfillment space in the industrial sector.\u201d<\/span><\/span><\/p>\n

Greenspan said he\u2019s had a lot of discussions recently with restructuring attorneys, and they made it clear that various funds are preparing to acquire distressed real estate assets, not only in retail and office but also in hospitality.<\/span><\/span><\/p>\n

\u201cAs this drags on, they are ready,\u201d Greenspan said. \u201cThe capital is out there.\u201d<\/span><\/span><\/p>\n

While uncertainly still characterizes the post-pandemic picture, Greenspan some things are still clear.<\/span><\/span><\/p>\n

\u201cTo be sure, retailers are going to be closing thousands of locations,\u201d he said. \u201cIt\u2019s going to be tough. This is not the end. But we will see some winners here \u2013 smart operators that optimize their real estate to cut costs, improve performance and position themselves for the new normal to come.\u201d<\/span><\/span><\/p>\n

\u00a9 2021 Florida Realtors\u00ae<\/span><\/span><\/p>\n<\/div><\/div>\n

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\nAuthor: kerrys<\/p>\n","protected":false},"excerpt":{"rendered":"