How has covid-19 impacted CRE mostly Office buildings space?

Question

Since mid March 2020 many Companies in service sectors from IT Finance Insurance to others have over 70% of their workforce Working From Home; seems like it will continue till end of 2021.

All depending on vaccinations and sars-2 virus mutations; 2022 might be same or beginning of things starting to come to pre covid-19 era normalcy but even then much of early 2022 may be same case WFH for many.

Here in India at least; most Office building tenants belong to one of 3 categories;

1] Long term committed lease with significant security deposits. So they are stuck in paying rents helplessly

2] Long term lease but flexibility of negotiations, have re-negotiated their lease and cut back significantly on rents

3] Short term flexible lease; many have closed or terminated their lease.

If you visit large Office Parks; situation is similar, great many of them have 10-20% workforce on premises than what was the case till Feb 2020.

With all this and Automation gaining momentum with 2.0 version in early stage; How do you see CRE mainly Office building space in terms of occupancy/rents/investments as well Design change to accommodate Future which seems very different from what we are used to?

Also, which areas of Real Estate, Automation will help make everyday life more easy and beneficial going forward?

Thanking in Advance

Vijay Kurhade · Answer

Thanks a lot @Pedro Hernandes for sharing your views.

I agree to portfolio reporting part; I have few questions regarding same.

Real Estate being iliquid or infrequently traded asset class, Does it really require daily portfolio reporting since changes in price are mostly on month-quarter basis unlike frequently traded assets.

Also, on automatic fundraising or investments in RE, can investors really be comfortable with it since there are not only Returns or Future cash we look for when analyze any potential investment but many experts and associated soft costs are part of almost each transaction.

Trying to understand which features for Portfolio Reporting and Automation of Fund allocation or raising through various options; automation can serve and in which capacity.

Regards-

Vijay

Pedro Hernandes · Answer

Vijay, for sure in fundraising, with a software to automate real estate fundraising, portfolio reporting, and investor relations. An investor portal is a major tool in the ‘LP investor delightment puzzle’ because investors crave transparency, updates, convenience of investing online, and reporting they get from other asset classes.

The market is sprinting through this curve. We estimate that within the next 2 years we’ll cross the 50% mark of syndicators that provide their LPs a superior investment and reporting experience through an investor portal. The relatively light investment cost in a solution is an obvious cost-benefit analysis win because as a new or growing business fighting for market share.

Pedro Hernandes · Answer

"Does it really require daily portfolio reporting since changes in price are mostly on month-quarter basis unlike frequently traded assets", no, you're right. The investments (investor statements) reporting generally is on a quarterly basis, but automation can help in development reporting, meaning, weekly updates on the development.

"can investors really be comfortable with it since there are not only Returns or Future cash we look for when analyze any potential investment but many experts and associated soft costs are part of almost each transaction.", this is precisely where automation comes to life and provide ROI, by having a single place where the syndicator can give the investor everything necessary to accurately forecast Returns and Costs.

How has covid-19 impacted CRE mostly Office buildings space?

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