The shift in tone that I’ve witnessed over the last week has turned from triaging the current crisis to thoughtful planning for the future. Curves are flattening, guidelines for when people can go back to work are being discussed, protective measures for “the new normal” office life are being prepared, and some folks have started to receive funds from the government relief programs. In construction, our active jobs continue to progress, but we are also very busy supporting our clients in pre-development and pre-construction activities. With the increased stresses and uncertainties in deal underwriting, renewed emphasis is being put on feasibility analyses, systems analyses, and constructability reviews. We are busy pricing and repricing a variety of projects right now, and are seeing a mixture of both cost and schedule implications, depending on the jobs. We are focused on finding smart, strategic solutions to the challenges facing us.
The development world continues to see rent reduction requests, slower leasing activity, and a pause in new investment sales. New deals that were on the back burner are under discussion again. We expect that capital providers will re-focus on new investments once the flurry of activity surrounding the PPP loan program quiets down. We have spoken with groups who are developing post-COVID-19 investment strategies based on macro demographic shifts. Others are not planning to overhaul their approach in the wake of the crisis. On every new deal under consideration, the underwriting is being re-visited, with sensitivity analyses and downside scenarios taking a more central focus. Overall, planning for the future seems to be on the top of people’s minds, if not yet demonstrated by their activities.