The Coronavirus, Commercial Real Estate and REITs
The coronavirus crisis is rapidly evolving and there is a great deal of uncertainty about the extent and severity. First and foremost, this is a public health issue threatening the health and possibly lives of many people. It is becoming increasingly clear, however, that the disruptions caused by the epidemic will have an impact on economic activity and asset valuations.
Until recently, most of the economic concerns were about activities outside the United States: cruise ships, other travel, the global supply chain and shortages of critical components made in factories in China. With the discovery of infections in several states in this country, however, it appears inevitable that there will be more extensive disruptions and economic losses within the U.S.
To gauge the impact on the U.S. economy and commercial real estate and REITs, it is important to keep in mind the distinction between spending and investment that may be delayed but will take place later, versus spending and investment that is cancelled completely.