When COVID-19 hit, CREXi, an online marketplace for CRE properties, saw search terms decline for commercial real estate assets. 

“The bottom [in searches] was probably a few weeks right after COVID pandemic came to fruition,” says Doug Shankman, SVP of Revenue at CREXi. “Late March was the bottom, and we’ve seen this V-shape return since. I would say we were really back in May, but there was still some investor concern and some broker hesitancy. Brokers are winning additional business in a variety of different forms, whether that business is traditional sales or auctions.”

The decline in searches wasn’t necessarily uniform. 

“We have seen a small dip in buyer interest, but when you break that down into segments, the institutional deals are seeing a much more significant reduction in activity,” Shankman says.

Overall, CREXi reports a 20 percent decline in visitation to its non-institutional properties, while institutional transactions saw a 33-percent decline.

Shankman speculates that many non-institutional properties are smaller, essential retail assets that haven’t been hit as hard by COVID-19. On the other hand, those with the highest density have suffered the worst.

“The sectors that have been impacted the most are office and hospitality,” Shankman says. “With those, which are larger institutional office and hospitality deals, the buyers are waiting to see what’s going to happen.”

If the economy deteriorates further, Shankman predicts that institutions could start to put their assets on the market. 

“I think the institutional capital or the larger ownership groups will potentially be quicker to dispose of assets,” he says. “Maybe some of those groups look at an auction environment.”

Ultimately, there will be buyers if these owners decide to move distressed properties. “It’s all a pricing sensitivity analysis,” Shankman says. “Depending on their pricing sensitivity, there are vehicles where they can dispose of those distressed assets.”

Shankman predicts that small owners, on the other hand, will remain steadfast in their desire to hold their properties.

“The smaller owners are going to do whatever they can to hold on,” Shankman says. “They potentially could try to take out additional loans to make ends meet.”

While Shankman thinks big box stores are being heavily scrutinized, he, like many observers, sees the industrial sector holding up well. “The industrial sector is by far and away benefiting the most from our perspective,” he says. “You’ve got the refrigerated warehouses that are helping online grocery stores because online orders are increasing. That is causing a demand for fulfillment centers. Data centers are still at an all-time high.”

Regardless of the sector, there are still a lot of CRE investors looking for assets. Even with the COVID shutdown, Shankman says CREXi is eclipsing last year’s search totals. Part of that may be because “people just have more time on their hands.”

“A lot of this [COVID-19] has expedited the notion of a digital transaction and looking for new marketplaces,” Shankman says.