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Initial Takeaways On How The $2T Stimulus Helps CRE
NREI – The recently approved $2 trillion stimulus package has some line items that stand to hopefully provide relief to the CRE sector. The bill aimed at helping the American economy navigate an unprecedented shock also includes some added measures to aid the CRE sector: a potential change to the Qualified Improvement Property depreciation rules, federally guaranteed loans from community banks to small businesses, and allowance for a five-year carryback of net operating losses for non-REIT businesses. These and other measures outlined in the document could provide aid to various businesses, landlords, developers, and investors during this period of economic uncertainty, allowing for many businesses to stay afloat.
BisNow – As companies are thrown into work-from-home transitions, it’s clear that this trend may continue on even after the coronavirus is no longer a concern. CEOs of startups with fully remote workforces have been vocal about the advantages the practice has had for their companies. Lower overhead, increased team productivity, and better leverage in hiring are all benefits to operating with a remote workforce. For companies that have effectively adapted to remote working during this time, they may not want to return to their old ways. This will influence how businesses think, structure, and hire for their workforce going forward, and could ultimately change office and multifamily class functionality as we know it.
WSJ – The current economic situation has investors turning to niche CRE asset classes that can potentially weather a recession, such as Self-Storage. Self-Storage is of current interest to investors because it has historically exhibited lower tenant turnover, entails relatively low maintenance and operational costs, and benefits from counter-cyclical demand patterns: consumers tend to be skittish about moving stored items during a health crisis, further supporting lower tenant turnover. These dynamics supported the relatively strong performance of the asset class during the Great Recession.