Excerpted from the July 27, 2020 issue of Massachusetts Lawyers Weekly
While many commercial tenants are seeking rent relief in order to survive the impact of the COVID-19 pandemic, it’s too soon to tell what the long-term impacts will be for brick-and-mortar retail and the demand for office space.
Paula Devereaux, Pierce Atwood real estate partner and immediate past president of the Real Estate Bar Association (REBA), noted that the current crisis has added “uncertainty to the market.” She added, “it’s so hard to know now what’s happening with retail that it’s impossible to say which retailers are going to be able to survive this and which won’t.”
Paula, also noted that the pace of commercial real estate transactions has slowed during the pandemic, as has lending activity. “Banks are worried about the loans they have on the books today as well as what might happen in the next six months,” adding “They’re a little gun shy.”
Pierce Atwood partner Daniel J. Bailey, who focuses his practice on the redevelopment of commercial property, added that lenders providing project financing are now requiring more equity. He stated, “With the COVID crisis, the lending environment has certainly changed,” and that the pandemic has had a direct impact on mixed-use developments, which comprise a portion of his legal practice. Dan added, “Any prospect of doing any sort of new build – restaurant or retail – is nonexistent,” noting that deals that were halted in March may not be coming back.
Paula pointed out the large $1.3 billion Winthrop Square project, where developer Millennium Partners had to scale back the project due to the loss of financing early on in the pandemic. “That’s the tip of the iceberg,” she said, “You’re going to be seeing a lot more project changes.”
Dan noted that he has been successful moving his clients’ projects forward by conducting Zoom meetings with various municipal zoning boards. “The hard part is presenting plans and charts. While those can be put up on the shared screen, it’s just not the same as having full-scale drawings.”
Finally, Paula mentioned that the one bright spot to come out of the COVID-19 crisis is the demand for laboratory space. And while that type of space was in high demand before, it has become “even more attractive because of the increased demand for medical research.”
The complete article by Pat Murphy can be found in the July 27, 2020 issue of Massachusetts Lawyers Weekly.