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New law aims to help commercial real estate owners
Briona Arradondo reports
TAMPA, Fla. - Nearly one in four hotel owners have fallen behind on paying their debts since COVID-19 reached pandemic levels. Now, commercial real estate owners and managers are feeling the pinch, according to industry leaders.
Whether you’re shopping, going into the office or checking into a hotel, commercial real estate is a part of daily life.
“We’ve continued to sell office buildings and we’ve continued to lease office buildings but there’s no question that there’s stress coming,” said commercial real estate broker Steven Silverman, who is the owner of Tampa Commercial Real Estate.
Silverman said the market is taking a hit during the coronavirus pandemic with the impact reaching retail, hospitality, land development and more.
He said deals are moving through at a much slower pace, plus it’s harder to get a bank loan.
“Even today, tenants came to us, they can’t pay the rent. They’re operating at half. The landlords are trying to work with them. We spend more time trying to help tenants and landlords now than we’ve ever spent,” said Silverman.
Silverman said some parts of the commercial real estate market are doing well, such as the industrial and distribution sectors because they do not hold onto inventory and are in demand as more people shop online.
The hotel industry, however, is perhaps the most affected.
“We have been destroyed frankly. We were hit first and probably hit the worst,” said Chip Rogers, the president and CEO of American Hotel and Lodging Association.
Tuesday, the AHLA said nearly one in four hotels are behind on bank payments according to a national report by Trepp.
“About a quarter of those have fallen into delinquency, and the next stage after that, of course, is foreclosure. And when you compare that to the beginning of this year, only 1.3% were more than 30 days overdue,” said Rogers. “We have almost now 25% that are 30 days overdue, and at the beginning of the year, it was only a little over 1%. So, that gives you an idea of how dramatic this swing has been.”
The industry now faces a historic wave of foreclosures across the country, and the reality adds another gut punch from the effects of the health crisis.
“The biggest impact is going to be a loss of jobs. As we started 2020, across the United States, one in every 25 jobs was hotel-related. So far, millions of those jobs have been lost,” said Rogers. “It has a spiraling effect. It’s going to be damaging. Everyone will feel it in some capacity, but most specifically those people who work in our industry.”
The AHLA hopes proposed legislation in Congress will give the hotel industry and other commercial real estate businesses the help they need, and a Florida congressman is among several lawmakers working to get that relief. U.S. Representative Al Lawson, D-Florida, co-introduced a bipartisan bill called the HOPE Act, or Helping Open Properties Endeavor Act, to help small businesses in commercial real estate that are struggling to make rent during the pandemic.
The AHLA sent a letter Tuesday to members of the U.S. House of Representatives in support of the proposed bill.