March 11, 2020
COVID-19 has hit the Puget Sound harder than any other metro in the United States, and the number of cases continues to grow in the Pacific Northwest’s other large metro area, Portland. New research by Colliers International predicts long-term impacts on commercial real estate will likely include increased janitorial expenses, as landlords realize the importance of proactive hygiene.
One practice being already adopted by some companies is implementation of remote-work policies. As supply chains are disrupted, there will be ripple effects felt throughout the U.S. and global economy for months to come, notes Colliers.
Colliers’ Jacob Pavlik also wrote in the report, “Given the limited spread of COVID-19 in the United States, the disruption to real estate will be limited to significant concern on an individual level and uncertainty on an institutional level more than actual health risks. In Seattle, F5 Networks closed its 516,000 square-foot office tower in downtown last Monday for in-depth cleaning, after it learned an employee came into contact with someone who tested positive for COVID-19.”
Depending on the spread of the virus, more building closures like this could take place as companies work to ensure health and safety for their employees, observes Colliers. As a precaution, Nike closed its world campus headquarters outside Portland last weekend for a deep cleaning as well.
The industrial market will likely be most impacted over the long-term, predicts Colliers. Supply chains are already experiencing disruption, as Seattle-based Amazon warns of longer delivery windows for its Prime Now and Amazon Fresh services, in addition to halting all non-essential travel, domestically and abroad.
Portland and Seattle are heavy port cities, and Colliers’ Pavlik notes they have a lot to lose from China’s quarantines. Oregon exported $4.7 billion of goods to China in 2018. A vast majority of those are from Intel in Hillsboro, but it also included agricultural products and apparel, as well. Seattle is even more dependent upon China for trade, with 14% of all U.S. exports to China coming from the state of Washington. King County alone exports $5.9 billion in merchandise and commodity sales, primarily related to the aerospace industry.
In the coming months, companies based in the Portland metro and Puget Sound regions are expected to feel the impacts of COVID-19 beyond any limited health risks. Despite China’s factories beginning to open again, there will be changes to supply chains globally that will likely impact demand for space in the Portland and Puget Sound markets, predicts Colliers’ Pavlik.
Connect Media hosted a CRE and Coronavirus webinar on March 11, 2020. Commercial property leaders shared insights on proactive precautions they are taking to prepare properties for the COVID-19 threat. You can listen to the webinar on this link.
For comments, questions or concerns, please contact Dennis Kaiser