In comparison to the last several chaotic weeks, this past week has been relatively stable. Work continues on about 95% of our active construction sites across the country. Most municipalities have clarified that construction is an essential business, and we continue to enforce new health and safety procedures. Last week I mentioned potential delays due to reduced crew sizes and the sometimes-slower pace of inspections. Up until this point, we have not seen significant delays due to shortages in materials. However, we have recently been made aware of a handful of large suppliers that are shutting down their North American production lines, which could undoubtedly have significant ramifications in the coming weeks and months. Navigating these challenges effectively will prove critical.

The development industry includes a wide range of entity structures – from private developers to publicly-traded REITs. Unsurprisingly, many of these businesses are facing their own unique set of circumstances and economic pressures, including tenants’ inability or unwillingness to pay their full rent. Many tenants are asking for some form of rent relief. I have anecdotally heard of some creative negotiations that give current relief in exchange for movement on other points within the lease, such as term extensions or removal of termination options. Some development sites look to shake loose as a result of the shift in focus to maintaining existing cash flows. There continue to be opportunities for winners and losers on a deal by deal basis.

The top priority for many this week has been the application process for the Paycheck Protection Program element of the CARES act. Although, in many respects, this has been a moving target, the potential impact that this money could have on the economy should not be underestimated. Many are predicting that the current allocation of funds will be insufficient given the level of demand, and there may be more money approved later on. The scale of the demand for funds from the PPP, as well as the payment (or non-payment) of both rent and loans which were due this week, should provide further insight into our environment next week.

Written by Molly McShane, Chief Operating Officer of The McShane Companies
Published by ULI Chicago

Latest News

2021 Notable General Counsels

2021 Notable General Counsels

Dan McShane, Chief Strategy Officer and General Counsel, was named to Crain's Chicago Business' 2021 Notable General Counsels list. With more than 20 years of experience, Dan coordinates strategic planning and risk management strategies while overseeing the company's...

2021 Next Generation Award

2021 Next Generation Award

Senior Development Manager Derek Buescher received Connect Commercial Real Estate's 2021 Next Generation Award. The award recognizes young leaders in the industry who stand out because of their talent, drive and fresh ideas. Derek joined Conor in 2016 and is...

Suburban Developer of the Year

Suburban Developer of the Year

Conor was named Suburban Developer of the Year at the Greater Chicago Food Depository's 33rd annual Commercial Real Estate Awards. Conor has provided customized speculative and build-to-suit development services for over 30 years. Innovation through sustainability and...

Conor Sells Skyline Commerce Center in Mesquite

Conor Sells Skyline Commerce Center in Mesquite

Conor Commercial Real Estate is pleased to announce the sale of Skyline Commerce Center in Mesquite, Texas. The firm sold the two-building, 198,000-square-foot industrial development to a global investment company. “Mesquite is an underserved market when it comes to...

Conor Sells Lotus Project Phase I

Conor Sells Lotus Project Phase I

Conor Commercial Real Estate and joint venture partner WHI Real Estate Partners have sold the first phase of Lotus Project to a Chicago-based investment advisor. The newly built industrial park in Chandler, Arizona, includes four state-of-the-art advanced...