Norton: Things should be looking very different on the other side of pandemic

For commercial real estate, there are many outcomes that could, or may, happen but it's too early to tell

Bill Norton

I am sitting in our 3,000-square-foot office all by myself as I begin writing this column – that is social distancing. My son is working from home (my home) and, as he has three computers going simultaneously with team members in Europe, the Middle East and throughout the U.S, it is pretty hectic.

I am taking part in a NH Business Review webinar on April 30 to discuss the effects of the virus on commercial real estate. I presume that is what readers are most interested in having me opine upon.

First, it is too early to see when and how this is going to resolve itself. It will not be quick or soon. We are in recession, and it could be a long and deep one. The feds will continue to throw lots of dollars at this – $2.7 trillion and counting as of this writing. The banks will likely reduce their cost of funds (from the Fed), perhaps to zero! The question is – where is the bottom?

One concern is that we fail to learn all the appropriate lessons from this. So we do not want to bounce back so quickly that we ignore the facts and fail to make all the changes needed.

One guest on NPR, a professor of “Homeland Security” at Boston University stated that we have lost March and April (and now maybe May and June …) So, we (businesses) will lose two to three months of revenues but will still have 12 months of expenses. The longer the “stay-at-home” lasts, the deeper the hole we have to climb out of.

The virus was the trigger, the catalyst which toppled the dominoes. It is becoming apparent that the economy was pretty shaky before Covid-19 appeared on our shores.

This is especially the case for lower-income households and, ironically, big companies that rely on a global supply chain.

Globalization and globalism are both here to stay, but there will be some corrections, and their needs to be, because this is not a one-off. There will be more of these. With 7.5 billion people on the Earth, we are forcing Mother Nature to the limits. Hopefully, there will be a vaccine for Covid-19 soon, but we go through flu season every year. Every year we can get the flu shots – some work and some don’t.

This past winter, we had the choice of a “single” flu shot or a “triple” flu shot, neither of which anticipated Covid-19. The Covid virus includes the common cold. Covid-19 has not mutated yet, but it likely will. It is unclear if we develop antibodies or not. So we have lots to learn.

The reopening of the economy will be slow and deliberate. I spoke with a hotel owner who said they do not plan to open back up until Labor Day (at the soonest). Many restaurants are trying to negotiate the Paycheck Protection Program regulations, which is very challenging without a time line for opening up to the consumer.

For commercial real estate, there are many outcomes that could, or may, happen, but it is too early to tell or forecast. The recovery could be a “V”, a “U” or a hockey stick.

Whichever it is, retail will look different in a year or two. Local and regional warehousing may prosper, as we decide to dial back from “just in time” inventories. Manufacturing will move to more robots – they don’t get sick and can be run remotely! Will people move out of the big cities? Will “work from home” get real traction and, thus, demand for office space shrink? Will the hotel sector shrink – if so, what or how does one repurpose these properties (housing for the homeless)?

As I said to my son and daughter, we will weather this event, but there are many who will not fare so well. We cannot lose track of them when we come out the other side. Be safe and be well.

Bill Norton, president of Norton Asset Management and an honorary member of AIANH, is a Counselor of Real Estate (CRE) and a Facilities Management Administrator (FMA). He can be reached at

Categories: Real Estate, Real Estate & Construction