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Arizona: Commercial Real Estate Outlook in the Wake of COVID-19
May 1, 2020

Arizona's Commercial Real Estate Outlook in the Wake of COVID-19

by The CE Shop Team

CBRE’s 2020 Outlook: Stability Amid Uncertainty

In the wake of nationwide closures due to state stay-at-home orders, CBRE has released their company's outlook for the economy and specific commercial real estate sectors. In this report, CBRE addresses the impact of COVID-19 and the effects of containment procedures on the commercial real estate industry. 

Spencer Levy, CBRE’s Chairman of Americas Research and Senior Economic Advisor, said in a statement with the official release of the company’s outlook, “Much of America is planning its return to the workplace. While that is a welcome turn of events, we also need to acknowledge and embrace that companies will return – slowly – to a changed workplace with new procedures. Office users likely will practice social distancing by rotating employee groups allowed into the office on certain days. Restaurants, stores, and hotels will need time to reassemble their workforces and restock supplies while limiting in-person patronage. It is likely that society and business won’t fully return to normal until we have a vaccine.”

Although changes to our daily lives will continue when stay-at-home orders are lifted, the outlook still looks bright throughout the industry.

CBRE’s Outlook for the Economy and Specific Sectors

Economy

  • Economic news last week was negative, with U.S. employment rising to 10.5 percent from the 3.5 percent the U.S. had before the outbreak. CBRE forecasts that the third quarter will be stable and recovery will begin in the fourth quarter.

  • States will determine their own timelines for reopening their economies, based on COVID-19 cases, impact on health-care systems, the extent of access to testing, and transparency around exposure sources and how to contain it. Governor Ducey has extended Arizona’s stay-at-home order through May 15.

Office Owners & Retail

  • Offices and users will have to shift their focus to planning their return to work. Initiatives will need to be put in place for social distancing guidelines, enhanced cleaning, as well as increased supplies of cleaning products, masks, gloves, and sanitizers.

  • Retail stores planning to reopen will require multiple safety protocols. The key protocol will be limited entrances to control traffic and in-store density. Some selected stores will begin to re-open throughout Arizona beginning May 8th, and will need to implement heightened health and safety protocols.

Hotel & Travel

  • In the hotel industry, domestic leisure travel will return first, with business travel following next. International travel to the U.S. will not fully resume until the virus subsides worldwide. Conventions and group meetings will likely be restricted until 2021. In Phoenix, the much anticipated Atari Hotel was set to make it's big opening this year, but with state-wide closures, the plan's have been put on hold.

Food & Beverage

  • A new survey by the National Restaurant Association found that 14 percent of U.S. restaurants have permanently closed or plan to do so within the next month. After reopening occurs, social-distancing efforts will reduce seat count until cases drop drastically.

Industrial & Logistics

  • These two sectors have been the focus of more in-bound capital, but investors are looking for core, big-box warehouses in primary and secondary markets near logistical hubs.

Data Centers

  • Data centers have been insulated from the COVID-19 fallout, while work-from-home orders and social distancing guidelines have increased demand for bandwidth. Cloud solutions are predicted to grow, while demand for enterprise solutions is likely to flatten due to budget pressures.

How to Safely Work as an Arizona Agent During COVID-19

Real estate is an essential service in Arizona, which is great news for agents throughout the state. However, this also comes with responsibilities and new guidelines to follow. Agents throughout the country are having to change and adapt to the changing landscape while still meeting the needs of their clients who want to buy and sell.

If you’re looking for resources to help you better understand how this pandemic affects you and how you can respond, take our free Doing Business During COVID-19 course.

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