Measures to contain the spread of COVID-19 are shifting by the day — and so are responses by investors, companies and buyers. To track the impact in real-time, RE|source Miami is asking real estate professionals in various sectors to give us a report on what they are seeing.
Today, we hear from Tere Blanca, CEO of Miami’s Blanca Commercial Real Estate. She answered questions March 18.
Q: What are you seeing from office clients in terms of deal flow? Generally speaking, are clients continuing to sign leases and look for space, or have they put things on hold?
For context, our firm has a 30% share of the office leasing market in Miami-Dade County for Class A and B space. Almost every one of the leases that we have been negotiating on behalf of our clients have been signed or are expected to be signed for transactions that have been in process. Less than a handful have taken more of a wait and see approach.
Prospective tenants continue to make appointments to tour space. Some have asked for changes in the procedures to do so, like permitting access to vacant space with less total people present, but both landlords and tenants are moving fast. The normal time that it takes to see a new draft of a lease, with comments, or to reply to a proposal to lease space has shortened.
Q: For your clients who are calling a halt, is it a temporary wait-and-see, or is it a hard stop? What’s the thinking?
Without exception, any client in the market for office space that has had second thoughts, has made it clear that any delay is temporary, whether it’s a new lease, lease renewal, or change in seating standards.
Q: What effect has the downturn in the stock market had on your strategy and on your clients’ thinking?
While the stock market certainly can influence leasing decisions, the overall economic performance and growth in the U.S. and in South Florida most directly influence office leasing. We advise our clients on how to price the space they will lease to seat their people to run their businesses. It is far more advantageous for tenants to make leasing decisions based on securing the space they need to run their business, and not try to second guess the market and changes in rent.
We remain extremely enthusiastic about Miami-Dade’s and South Florida’s overall office market, and the local economy, despite expected contractions in the first half of the year. We expect there will be pent-up demand by year-end, which will be reflected in more office leasing. We don’t expect there to be material changes in the asking rental rates for office space.
Q: From where you sit now, what do you expect to be the greatest business challenges in the coming weeks, and how long do you think it might be before the fears ease?
Companies in aviation, hospitality, retail, food & beverage, and the entertainment sector, as well as the supply chains tied to these industries, will be the most challenged by the loss of sales. The people who end up losing their jobs as a result of this will need the most help.
Q: From where you sit now, what do you think will be the greatest opportunities in the next few months?
Our firm is in the business of providing our clients with the best advice about market conditions for office space, rental rates, vacancy rates, and negotiating the business terms and conditions associated with entering into lease agreements for office space. In times of economic uncertainly, our clients rely on us more than ever for strategy and execution. We match needs with opportunities.
Some of our clients and other tenants will surely be asking for our help and advice to sublease space. Some other clients will be leasing additional space to better provide medical, financial, warehouse, headquarter, logistical and other services related to the current pandemic.