The coronavirus pandemic has impacted everyone, and this includes those who work in commercial real estate. With a massive, widespread, global impact, it is important for everyone who works in the commercial real estate industry to understand how the pandemic has impacted commercial real estate and what the recovery process is going to look like.

First, it is important to understand what this industry looked like before the outbreak of the coronavirus pandemic. Unlike the last economic recession, which took place in 2008, the commercial real estate industry was in a strong position before the pandemic took hold. Capital availability, balance sheets, and liquidity all looked healthy. This meant that companies were able to easily manage their debt maturities, placing themselves in a position to benefit in the long run.

At the end of the second week of March, the outbreak was officially declared a pandemic. It was spreading quickly, hitting countries all over the globe, and then took root in the United States. At that point, financial markets began to decline sharply. In some cases, stock markets dropped by close to 30 percent. Even the treasury yields on various bonds declined as well. Instead of showing a lag similar to multiple other industries, the commercial real estate industry was impacted virtually immediately. This is because the trade activities and the businesses run by the occupiers of commercial real estate buildings were shut down due to government regulations.

Furthermore, there is an impact on lending as well. Even though many lenders are offering attractive options when it comes to commercial real estate, many industries are still walking this line with caution. Furthermore, the rate of delinquency when it comes to commercial mortgage-backed securities has moved up slightly as well.

Those who are looking to develop new real estate projects have noticed that their cash flows and timelines have been impacted. The slow pace of activity, a halt when it comes to certain types of construction, and slowing demand for new development projects have impacted the commercial real estate sector. Furthermore, a contractor survey was conducted recently, showing that more than half of all construction firms in the United States had to halt or suspend projects due to the availability of materials and personal protective equipment.

With a solid view of how the pandemic has impacted the industry, it is time to take a look at what the recovery process is going to look like. When compared to other economic downturns that have taken place recently, this coronavirus pandemic has been unique. Its global reaction and reach have been entirely different when compared to other economic issues. Entire cities, regions, and even countries have been forced to ask their citizens to shelter in place. This lockdown led to an abrupt change in the way everyone works. As a result, the remote working lifestyle is not able to be applied universally to the real estate industry. These converging factors are likely going to continue until there is a vaccine available. The good news is that once there is a vaccine available, the uptick in commercial real estate should be relatively quick, as pent-up demand for business projects should start to take hold.

These are just a few of the many ways that the commercial real estate industry was impacted by the coronavirus pandemic. Even though it is going to take some time for this industry to recover, the overall outlook of the future is bright. It will be interesting to see how the commercial real estate industry rebounds once a coronavirus vaccine is available. That is going to be the rate-limiting step as far as the recovery of this industry.