CBRE’s COVID-19 Webinar

March 27, 2020

Notes from CBRE’s COVID-19 Webinar on March 27, 2020 taken by Jonathan Rivera

The overall takeaway is that the nation is going through a very deep recession and economic shock that will last for approximately six months.  However, due to pent-up demand and massive government stimulus, the post-crisis recovery is expected to be relatively swift.  Here are the details discussed for the general economy, as well as each of the main real estate sectors.

General Economic Impacts

  • Annualized GDP forecasted to be -6.3% for Q1 and -20.5% for Q2.  However, the economy is expected to rebound quickly with forecasted GDP of 8.6% in Q3 and 15.9% in Q4.  The rebound will be fueled by huge pent-up demand, as well as government stimulus (these forecasts are based on observations made in recovering nations in Asia).
  • 8 million lost jobs and an unemployment rate peaking at 6.1% in Q2
  • Another three weeks before the US starts to “bend the curve”
  • Lockdowns will likely last until mid-May
  • Biggest negative impact will be to the Accommodation, Food Service, Retail, Wholesale, and Entertainment sectors of the economy, while Healthcare and Federal/State/Local government will see expansions.
  • Cities hardest hit will be Las Vegas, Orlando, and Miami.  Cities with large Transportation and Manufacturing sectors such as Chicago, Houston, Dallas and Atlanta will also be hard hit.  Least hit will be DC and other public sector cities such as Sacramento.  Tech hubs like San Francisco, San Jose, and Boston should also fare better.


  • Two factors hurting demand: The ability to travel and the will to travel
  • Current hotel data from Italy and China is being used for US forecasts
  • Very steep decline in occupancy over the next 2 to 3 months, followed by a 12 to 16-month recovery.
  • 10.8% decrease in RevPAR in 2Q20 to $54.76 and an average occupancy of 46.8%
  • Cities with high international travel or recreation attractions will be severely affected
  • Few transactions are expected.  Of the transactions that do occur, most will likely be distressed.  As such, cap rates are expected to spike.
  • Stimulus bill includes loans and grants for smaller hotels


  • Immediate impact: closed stores, restaurants, and movie theaters.
  • Deferred impact: rising unemployment
  • Retail tenants are increasingly drawing from lines of credit
  • The crisis will likely hasten the shift towards e-commerce and a virtual society


  • Construction delays expected due to supply chain disruptions
  • Tech sector was 20% of office use and will help to partially insulate the office market from the crisis
  • Decline in oil prices will increase the Houston vacancy rate
  • Tech and lab space will likely lead the recovery


  • The crisis has created a temporary shock that has disrupted a 10-year growth period and 20-year trend towards urbanization.
  • Vacancy expected to increase from 4.1% to 5.7% by Q4
  • Rent growth is forecasted to be -3.4% before recovering by Q3 2021
  • Eviction moratoriums and rent abatements will entice tenants to stay.
  • Apartment demand is expected to recover post-crisis with the long-term vacancy rate stabilizing at 4.25% and rent growth stabilizing at 2.75%


  • Short-term: a slump in manufacturing, as well as a rapid increase in e-commerce (some of which may be due to panic buying).
  • Long-term: a push to carry higher levels of inventory, investor diversification, and e-commerce will get a higher share of consumer spending that previously thought
  • Forecasts are for negative absorption in 2020 before rebounding in 2021 and 2022, with higher absorption forecasted over the long-term than before the crisis
  • Rent growth is forecasted to be -1.3% in 2020 and 2.9% over the long-term
  • Post crisis: there will be a larger shift towards e-commerce and higher inventory levels