Bookmarks: 5 Interesting Articles That May Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. I welcome your comments on these articles.

1. Nice to Meet Me

A group we are talking to regarding representation asked us to come by and see their office space. In the pre-pandemic world this would be a joyous question to get and we’d answer with an enthusiastic yes.

I agreed to the meeting, of course, but I confess I had to manage through my own trepidation. This would be my first in person business meeting in over 10 weeks and the virus still rages out there. My last business lunch was (appropriately) on Friday the 13th of March. Since then, it’s been me, my video calls and two snoring pugs all day every business day. But if I’m honest with you I was thinking about myself and my own concerns. Me me me.

The day of the meeting I put on broker business attire and my kids thought I’d lost my mind. Even the dogs looked at my funny. I got into my car and felt strange actually driving to a business meeting. I drove to the address through what seemed like Sunday morning level of traffic, which is to say virtually none.

When my team arrived a few minutes early (each in our own cars), I called them and asked an apparently simple question; should we show up in the space wearing a mask?

2. Atlanta Sublease Availabilities-The Canary in the Coal Mine

Whenever bad news happens in the world, one of the canaries in the coal mine for real estate is the availability of subleases. So, I’ve been getting a fair number of questions about activity in this area.

The crack research team at Cushman & Wakefield Atlanta, lead by Christa DiLalo and assisted by Riley McMullan, swung into action to find answers.

The report card says subleases are up significantly and going to continue to rise. Available sublease space in Metro Atlanta has increased 15% since Q1 20, and 46% since Q1 19. Sublease availabilities are currently at their highest point in this economic cycle. And it is widely assumed that Macy’s will put 90.000 s.f additional on the market after they announced they will not open their Midtown tech center.

The ratio of sublease availability to total vacancy continues to rise, with sublet space now accounting for 6.5% of the total in Metro Atlanta. In Q1, the sublease share of total vacant space grew for the fourth consecutive quarter, and Q2 is on track to see similar gains.

3. Office Tenants Pay Rents at Near Normal Levels Despite Coronavirus, REITs Report

The coronavirus pandemic that prompted companies across the Sun Belt to close their offices hasn't disrupted the ability of the commercial tenants of Cousins Properties and Highwoods Properties to pay rent.

Cousins, an Atlanta-based real estate investment trust that owns 19.4 million square feet of office space in the Sun Belt, said 96% of its office and retail tenants paid rent in May, an increase of 1 percentage point from April. On the office side, 97% of its tenants had paid May rent, up from 96% in April, Cousins said in an investor presentation. In March, before the full effect of the pandemic hit, its office rent collection was 98%.

Raleigh, North Carolina-based Highwood Properties reported 99% of its office tenants paid rent last month, the same percentage that paid in April. Highwoods owns more than 28 million square feet of office space from Richmond, Virginia, to Tampa, Florida, to Pittsburgh.

Office owners across the country had braced for a large drop in rent collections because of the economic crisis caused by the coronavirus. On May 1, Cousins said rent collections in the coming months could potentially be more challenging than April as the full economic impact of the health crisis comes into view.

4. Why Georgia’s reopening hasn’t led to a surge in coronavirus cases (so far)

Most experts agreed that it’s important not to conclude too much from the current data. It’s still early in the process, given the coronavirus’s incubation period and how long it can take to spread. It’s still possible that things will get worse.

“What I and others were saying back at the end of April is we’re not going to really see anything until June,” Eleanor Murray, an epidemiologist at Boston University, told me. “I think that’s still the case.”

There’s also the real possibility of data manipulation. Georgia has not proven itself to be above this. Until recently, it was including a type of test into its test count that experts say shouldn’t be included. It has also, for example, published a chart that switched dates in a way that, deliberately or not, made the state’s data look more favorable.

5. Luxury Developers Ramp Up Virtual Offerings for Stir-Crazy Renters

With the novel coronavirus and strict social-distancing mandates confining New York City residents to their apartments, Mr. Sheehan’s job—keeping his residents connected through a steady diet of events, activities and treats—has gotten a lot more challenging. When they are not planning virtual events, social directors like Mr. Sheehan have become a lifeline for stir-crazy renters, offering tips on which local stores have fresh fruit and short lines, and hooking up online activities for children.

“It helps them navigate trickier times, understanding that there are people here supporting them,” Mr. Sheehan said of the renters.

That Friday morning, he had set out white bags of neatly packaged ingredients in the lobby, tagged with the apartment numbers of residents who nabbed, free of charge, the 35 spots in the limited workshop. Before the lesson began, he checked in with Ken Connors, head chef of City Cooking West End, to make sure the chef’s webcams had good angles on his butcher block and stove.

Your success blesses others. I wish you a great a hugely impactful week!

Ken Ashley