Heitman’s Mary Ludgin Talks Pandemic, Capital Market Future

Heitman’s Mary Ludgin Talks Pandemic, Capital Market Future

To talk about the future, the new normal is so uncertain. That's what Mary Ludgin, head of global investment research at Heitman, says. According to Ludgin, speaking at the CREW Network Convention recently: A virtual experience. She informed the virtual audience that transaction activity in the capital markets had declined by 68% year-on-year and that most of the activity was in storage rooms for industrial and medical office buildings. Value-added apartments are still very much in demand and there are currently only a few activities in office and retail, she said.

“There is a bid / ask spread averaging 10% to 15%. Multi-family prices benefit from GDC funding, ”she stated. One thing she also sees is multiple brokerage houses doing core deals to test market prices.

"We're seeing more creative investment processes like virtual tours and drones," she said. "We are also seeing the willingness of third parties to travel to conduct inspections."

Many comments have been made since the beginning of the pandemic on the spatial impact of what has become normal during this crisis, she said. These include work-from-home, online buying, telemedicine, and online education. "The predictions of the virus / global recession's ongoing efforts are generally binary."

While she noted some differences by property type, she anticipates overall significant shifts in tenant demand in some sectors while little change in others.

So who are the big winners in the downturn? According to Ludgin, these are data centers and logistics.

“Working from home will dampen the demand for offices. The net effect of working from home is likely to be negative on space demand, ”she said. "The trend towards more space per employee is likely to be exceeded by space reductions through dedicated desk removal or increased remote work." Back office, she added, could be almost entirely removed depending on the infrastructure required. “Freelancers in cooperation – can go very much in the direction of remote work. The office footprint could increase in collaborative (STEM) and face-to-face meeting areas. "

It's a challenging environment in retail, says Ludgin. “The vacancy rate for all formats is increasing. Branch sales remain below pre-Covid levels. Sales outside of the store are falling. The demand for domestic and essential needs is highest. "

Restaurants show improvements and fitness and entertainment are mixed, she noted. “E-commerce is increasing, but business remains essential. Retailers with heavy omni-channel activity were able to spin during the lockdowns.

Overall, Ludgin says the end of this uncertainty will not be in sight until the vaccine is used.


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