Commercial real estate brokers will have to put more emphasis on their role as advisers as they navigate new challenges resulting from the COVID-19 pandemic, according to a panel of industry experts.
A group of Milwaukee-area brokers shared their experiences from the past few weeks and predicted what's to come as the state combats the global spread of the novel coronavirus. The virtual discussion was hosted last week by the Commercial Association of Realtors Wisconsin.
Bruce Westling, a retail real estate broker and managing director in Newmark Knight Frank's Milwaukee office, said many retailers have had to completely close due to stay-at-home government mandates. This means many won't be able to pay rent, which also impacts building owners and landlords.
Brokers are finding themselves helping both parties work through these issues.
"Our adviser role is now morphing into assisting tenants and landlords in the discussions that are happening," he said. "So, it's not necessarily a fee involved, but it's something you have to do to be a part of the transition."
Westling used a theoretical example of an owner of a strip mall who is suddenly faced with the reality that a majority of tenants won't be paying rent in the coming months, and doesn't know how to deal with the issue.
"There really could be some hand-holding required to help some folks through this whole disaster," he said.
Patrick Gallagher, executive vice president of CBRE's Milwaukee office, said that on the capital markets side, buyers and sellers are working to resolve any issues in pending deals that come up due to the outbreak.
Gallagher said transaction activity is down significantly, and closings that are occurring often take longer than planned. He said deals under contract are a "mixed bag." He has seen examples of deal terminations, some being repriced and some extending the due diligence periods.
"People are sort of feeling like we're all in this together now," Gallagher said. "There's been a bit of a unifying effect; buyers and sellers are working hard to figure out how to get to the closing line. Landlords and tenants are going to have to work together to get through some of these credit issues."
Another side to the adviser role for brokers is that beyond giving guidance to clients, they will also need to encourage their colleagues in weathering the storm, noted Scott Welsh, chief executive officer of Colliers International|Wisconsin.
"When it comes to all of what’s called our sales people, our advisers, we need to be motivational to those people that see their book of business drying up on a daily basis, knowing that what feels like a week or a month in any given instance will pass," he said. "There will be unique transactions happening, there will be unique recoveries, and we have to believe in that."
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