The Real Estate Community Talks COVID-19
Pamela Roman
The city as we knew it completely shut down on Sunday, March 22nd. In response to the rising concerns over COVID-19, Governor Cuomo announced to the public his "New York State on PAUSE" executive order. Statewide, all non-essential businesses closed their doors and gatherings of any size, regardless of the reason, were prohibited. The flags had been raised but there was still no clarity as to how severe the coronavirus outbreak was becoming or continuing to evolve. “I legitimately thought that this thing would blow over and it wouldn’t affect me whatsoever” said Jennifer*, a rental agent based in NYC. Unfortunately, this thing didn’t blow over and with it came a jarring sense of uncertainty. Especially for those working within the real estate industry.
For Pamela Roman, the New Jersey based Managing Broker at a corporate relocation company, she had an early awareness of the pandemic’s growing magnitude. “Because we deal with global relocation, we were really interested in following the impact it would have because travel was obviously going to be an issue from other countries” she stated. The relocation industry held strong throughout 2019, and for 2020 roughly four out of ten organizations expected an increase in the volume of relocated employees, with the budget to support it. But similar to New York, stay at home orders were issued in the month of March for New Jersey and any new business from their international network became uncertain. “I think the first two weeks in March was when we were realizing that it was going to impact us severely.”
Brown Harris Stevens’ top producing team of Nada Rizk and Joanne Greene states “COVID has changed the way that buyers shop for an apartment and offered a new perspective on due diligence. Once a welcomed offset to monthly common charges, buyers need to thoroughly examine the status of a building’s retail client and have a clear understanding of if and how a shortfall could be passed on to the shareholders. Renovation policies should also be reviewed, even the smallest project could be pushed out for months and be subject to new fees.”
Philip (Phil) Saint Denis Sanchez
Philip (Phil) Saint Denis Sanchez, a NYC based commercial and residential realtor, was able to “really pinpoint the moment” he realized COVID-19’s severity on both a professional and personal level. He had plans to head to Central America on March 13th, yet spent the week leading up to the trip contemplating whether or not to go. However, once he heard the WHO declared COVID-19 as a pandemic his plans changed. Right after hearing the news, he reached out to an ex who had been living in Tuscany. “This is no joke” he recalls her saying, imploring him to take the unfolding health crisis seriously. He ended up canceling his trip. When it came to real estate, for Phil it was “pretty immediately apparent that this was going to have major ramifications on New York City real estate and global real estate”.
Deirdre Virvo
Indeed, major ramifications were also obvious for Deirdre Virvo of lower Fairfield county: “I guess this really hit home for me right around March 5th, when we found out the kids were going to be homeschooled.” As a real estate investor, landlord, short sale negotiator and house flipper, having multiple real estate businesses came with a varying set of challenges. “We were all at a standstill because we didn’t know if this was going to cause a crash or a crisis and if we were going to see prices go down or not” she mentioned. As a flipper, she didn’t want to buy a house that might end up going down in value while she was working on it.
Once April came around, Jennifer* was now facing a series of hard truths, “this is not going to blow over, I’m not going to be making money for a while, my main source of income (which comes from the rental market) is going to diminish and I need a backup plan for the next six months to a year”. Aside from rentals, she also had three pending residential sales transactions. They all fell through in March due to fears surrounding the coronavirus. About a month into the stay at home orders being in effect for Connecticut, Deirdre resumed her search for properties to invest in. However, while the normal response rate to her marketing strategies were 1.5%, this time around it was zero. Phil could see that the world would never be as safe as it once was, “I’m not going to be able to run around in the city showing apartments.” The livelihood of these real estate professionals had entered a near state of suspension, with no clear sight into how things would recover.
While a core of the business within Pamela’s brokerage firm was from abroad, she and her team had to switch gears and turn their efforts towards domestic clients. “I feel bad, a lot of our agents relied on that income, that’s been their niche and they needed to adjust their style of business” she stated, “they have to become more traditional real estate agents now.” Although she understood the fear of the pandemic from a personal perspective, she was intent on remaining positive for the greater good and giving her agents the tools they needed to succeed in a newer environment. Her brokerage recently joined Zillow Premier Agent, and the program allows the organization to advertise their services on Zillow’s website. As of June 15th, New Jersey entered phase 2 of reopenings which now allows for open houses with a maximum of 10 people at a time; face masks and keeping six feet apart are still required. “Never in the history of anything has there been one thing that's affected your health, financial security and being able to see your loved ones all at once” said Pamela. How strikingly true.
Phil already had his ear to the pavement and an inkling that New York City real estate was poised for a change. “Multifamily was already tough for investment because of the 2019 laws” he stated, “and I felt as though this was going to make it even moreso.” A recent survey from PropertyShark showed that 12% of respondents felt multifamilies would be the most affected sector of commercial real estate and despite the jump in first quarter earnings as compared to 2019, the impact of COVID-19 may show more apparent as we cycle through the months. He also sees transformation on the horizon for retail property, one which makes sense, as people continue working from home and social distancing. Phil thinks a vacancy tax may end up being passed, a move that he states is “long overdue”. “In the past landlords have just sat on retail spaces forever,” he states, “my hope is that we use this as an opportunity to restructure a little bit….there needs to be some kind of equalizing mechanism that allows people to negotiate rents that are sustainable.”
Another business venture Deidre had underway was the opening of a residential assisted living facility. “That has been a big wrench, a major expense…I had put so much money into this but have nobody living there.” Although furniture for the property has been on backorder for months, she still anticipates the location opening on July 1st. With her rental tenants, Deidre had been very proactive in working with those that couldn’t pay due to COVID-19 related obstacles. She even went so far as to offer one tenant a job on her construction team and accepted deferred rental payments from another who was unable to reenter the US due to travel restrictions. When New York shut down, a flood of construction workers seeped into Connecticut looking for employment, where construction related work was still deemed essential. Although she was able to continue working on projects, it came at an unknown price that left her with guilt. “I hired a crew to come over from Westchester so that they could work,” she stated, “cause they couldn’t work in New York”. Unfortunately, throughout March and April she found that a number of her workers were falling ill with COVID-19.
“At the end of the day, you need to do what’s in the best interest of your clients” Jennifer* said. “I had to put on gloves, take videos (of the property) for them, I had to open doors then walk away and let them go into the building so there was no contact.”
It’s clear that this group won’t be deterred by this pandemic and are opting to work through it, no matter how difficult it may be. They’re adapting to change and, after all, that’s what you need to do to survive- especially from a business standpoint. These real estate professionals are ready to rethink and revamp their approaches to the industry. “I’m positive about the future, but it’s going to a long haul” Pamela mentioned, “this will separate the men from the boys, so to speak.”
Have a listing you think should be featured contact us or email at Jeremy@offthemrkt.com to tell us more! Follow Off The MRKT on Twitter and Instagram, and like us on Facebook.
