Much like last week, we continue to operate both of our construction businesses and our development business in a more stable environment. While we proceed to put current work in place, we are also focused on signing new work and maintaining a healthy backlog of business. Because of the long lead times necessary to build most buildings, the construction industry typically lags behind the rest of the economy. As a result, 2021’s numbers may show the adverse effects of Coronavirus more so than 2020. Our business was challenged this past week as some states, in our view, are prematurely opening up and putting our employees at a higher risk than we are comfortable with. We continue to respect CDC guidelines and are operating all of our job sites and offices nationwide within those recommendations. As I said last week, detailed planning is underway for how to open up safely when the right time comes.

Industrial development continues to be in a moment of pause. Although there have been some notable new e-commerce leases signed recently, non-e-commerce leasing is slow. Most sales of both land parcels and cash-flowing assets are on hold, as substantial discounts have not yet been presented, but more nuanced pricing in this new environment has not yet been triangulated. Underwritten lease-up time frames and rent growth are both becoming more conservative. Non-recourse lending seems to be less widely available in the short term. That said, industrial real estate is widely expected to be an eventual beneficiary of increased long-term demand. Those who time it well will come out of this successfully.

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

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