Worcester Business Journal

10 Worcester Business Journal | May 11, 2020 | wbjournal.com Short-and long- term consequences BY GRANT WELKER Worcester Business Journal News Editor e real estate and construction industries are adjusting to the fallout from the coronavirus pandemic, as they keep their fingers crossed about the long-term impact F or a long time, a main part of a real estate home search included an open house packed full of potential buyers; while at busy office buildings, coworkers stayed in close quarters with colleagues. For now, at least, none of that is possi- ble, thanks to the coronavirus pandemic. is new way of life has rearranged the real estate and construction indus- tries, just like practically every other part of the economy. Office tenants, with many workers staying home, have been putting more subleasing space on the market. Some construction has stopped, although cer- tain sites have continued operating with new health measures in place. Realtors are holding showings virtually, and po- tential buyers are foregoing the ritual of standing in a living room or kitchen and picturing it as their own. "We used to have open houses with 50 people," Bill Dermody, the chairman of the Greater Boston Real Estate Board, said in an industry webinar hosted by Peabody real estate data firm e War- ren Group. "at changed immediately. You're not going to see that again in the near future. You're not going to see that again in the far future." Residential, commercial and industri- al buyers are figuring out how long peo- ple will be forced into social distancing and how deep a recession will get. Little data yet shows how much the market has changed, as the pandemic is so rela- tively new, a clear picture on the impact to sales and rentals has yet to emerge. Commercial and industrial real estate Commercial and industrial sales already in the works typically followed through once the pandemic hit, and new lease deals driven by expiring leases largely continued. Besides those, deals are being paused to see how the virus continues spreading and what it means for the economy. "Most other deals have been put on hold," said Aaron Jodka, the managing director for research and client services for the Boston offices of Colliers Inter- national, a real estate services company. "If you have to transact, you are. If you don't, you aren't." Offices are largely empty today with stay-at-home orders, but employers are typically locked into longer leases than what would allow them the flexibility to make shorter-term decisions such as shrinking space permanently or moving to a suburban location, said Tucker White, a research director for the real estate firm Hunneman in Boston. Los Angeles realty firm CBRE, which has a location in Boston, said the office market should take far less of a hit than it did in the 2001 and 2008 recessions, though construction delays will lead to a slowdown in supply. Industrial proper- ties should be boosted by retailers and manufacturers looking to carry more in- ventory than they would have previously to be better prepared for any similar disruption in the future. Construction is continuing on some major Central Mass. projects, including a $45-million office building in Westborough for the medical optics firm Olympus (top) and the Courthouse Lofts development in Worcester (above) with more than 100 units planned. Inventory Direct vacancy Average rent Region (Square feet) (Square feet) per square foot 495 West 12.0 million 2.0 million $21 Framingham, Natick 4.8 million 626,000 $27 Greater Boston 221.6 million 18.2 million $41 OFFICE SPACE Inventory Direct vacancy Average rent Region (Square feet) (Square feet) per square foot 495 West 16.2 million 1.2 million $9.78 Greater Boston 184.2 million 13.0 million $10.11 INDUSTRIAL SPACE MetroWest commercial and industrial real estate First quarter Source: Hunneman PHOTOS/GRANT WELKER

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