They say hindsight is 2020, and looking back, it is clearer now to see what may have been missed as the calendar flipped from 2019 to 2020. Labelled at the time simply as “coronavirus,” many Americans watched as a new and mysterious illness made thousands of people sick in China. And though it was alarming, to a certain extent Americans believed that the virus would remain overseas and that modern medicine would bring it under control quickly. However, as Cambridge Realty Capital President Jeffrey Davis put it, “what started out as a whisper quickly turned into a major global storm that would affect every single person in the world on some level or another.”
Not only did its effects trickle down to every individual, but it also impacted every sector of business. The degree to which each sector felt the repercussions varied, but none was entirely spared the impact of COVID-19. Commercial real estate in general, and senior living in particular, had some winners and some losers, according to Davis.
As businesses throughout the US were shut down entirely in the spring, the ripple effect was enormous. Like many businesses across the US, Cambridge Realty Capital shut its office doors and sent staff home to shelter-in-place while working remotely. “It was challenging, but we coped, as did every other business. We are fortunate that much of what we do could be moved online easily. Where e-signatures wouldn’t suffice, we relied on courier services to transport original documents for signing,” Davis recounted.
Many of Cambridge’s clients were not as fortunate when it came to navigating the changes brought on by the pandemic. Senior living operators were suddenly faced with the potential for COVID-19 to run rampant through their facilities. “For them, things changed dramatically, and very quickly,” Davis stated. New policies and protocols had to be implemented from the beginning in order to try to mitigate the transmission and spread of the virus within facilities, including enhanced cleaning and limiting the number of outsiders who could enter care facilities. Protocols had to change frequently as new information about the virus became available and health authorities made new recommendations for safety.
Besides the obvious medical worries brought about by COVID-19, care home staff were also seeing first-hand the decline of residents’ mental wellbeing as they were unable to see their families. “Most of these facilities closed their doors to outside visitors during the early weeks and months of the pandemic,” stated Davis, “leaving residents without important emotional support and social contact. Some facilities are still not open to the public to this day.” Of course, some of those facilities also experienced tragedy when COVID-19 took the lives of residents, with the emotional impact still reverberating.
Business in general, and particularly retailers, took a major hit as almost everyone had to close their doors to the public. The stock market dropped 3,000 points in one day in mid-March.
Market losses continued, and the worst week of the Dow occurred in the middle of March 2020.
Stocks plunged extensively on March 23rd. However, rumours of the coming of a Federal stimulus package saw them rise 2,000 points by the next day for its biggest day in history. In spite of stimulus legislation being passed shortly thereafter, the first quarter of 2020 was the worst quarter in stock market history.
Throughout this turbulent and unpredictable period, various branches of the Federal government were working incredibly hard to mitigate the impact of the virus. Changes were rapid, occurring daily in the early part of the pandemic, causing stress and confusion for many business owners. “Fortunately,” Davis commented, “Fed Chairman Powell proved he was up for the job and never blinked in his actions, creating various liquidity events and Fed backing.”
Commercial real estate in particular also took a hit, although the severity depended largely upon the type of real estate. While some, such as warehouses, distribution centers, data centers, self-storage and others were minimally affected, other sectors like hospitality were crippled by the pandemic. Many hotels are closed, with the rest operating well below capacity and normal occupancy during the same time as past years. Airline flights have been dramatically cut back, with layoffs in every part of the airline industry.
Office buildings also took a hit, with many all but abandoned during the early months of the pandemic, and some still sitting largely empty. Virtually no CBD (Central Business District) buildings were built with sufficient spacing for adequate social distancing during a pandemic such as COVID in mind, and almost every vintage building is functionally obsolete at the present time. New leases aren’t occurring, and with many companies re-thinking and re-evaluating their business structure, it’s possible that new work-at-home models may cause companies to shrink or forgo altogether the physical commercial office space going forward.
Individuals, small businesses, and corporations alike are clinging to the hope that only an effective vaccine will bring. Two new vaccines which were announced in early November are already being distributed and administered. Although it’s likely to be some time before everyone in the general population has access to the vaccine, the idea that the first steps toward herd immunity have already taken place leaves everyone with hope. “It won’t be ‘business as usual’ for at least several months,” noted Davis, “for Cambridge or for anyone else.” Still, Davis’ outlook is positive, and he stated that Cambridge was able to help a number of its current borrowers take advantage of interest rates that were lowered to stimulate the economy during the pandemic. “Cambridge closed a total of 16 Interest Rate Reduction (IRR) loans in the first six months of 2020. The loans allowed the borrowers to reduce their interest rates without penalty and without refinancing their mortgage. They total $205,373,431 and will save the Cambridge borrowers tens of thousands of dollars over the amortization of the loans,” Davis reported. As for his own feelings about how 2020 unfolded and what 2021 looks like, “It was an amazing year,” Davis recounted. “Sometime during 2021, the virus should be behind us if the vaccine works as intended. It will be an amazing day when it is behind us and vaccination efficacy and virus immunity take place and people can discard their masks and leave them behind.” Davis hopes it culminates in parades organized throughout the world to celebrate VV Day (Victory over the Virus).