The coronavirus pandemic has changed the way the world does business. While some industries seem to have skyrocketed during these uncertain times, industries like commercial real estate are being hit especially hard. As countries learned of the vicious virus and ease of transmission, leaders have taken extreme measures to try and preserve the lives of their citizens. Schools are closed, non-essential businesses have been ordered to temporarily shut down, and leisure travel is forbidden. 
For commercial real estate markets, these mandates (although necessary) have created a significant cause for concern. Here is a closer look at just how bad things are for those in the commercial real estate business: 
Retailers Struggling to Pay Rent
Those in retail are finding it very difficult to stay afloat. Non-essential retailers have been forced to lay off employees and close their doors temporarily to reduce the spread of COVID-19. For retailers that remain open, the social distancing regulations and stay at home orders have negatively impacted their bottom line. 
While major brands may be able to financially withstand the temporary shutdown, smaller brands are struggling. With customers being urged to stay home, retailers aren’t getting nearly as much business as they’re used to. This, in turn, makes it difficult, if not, impossible for retail shop owners to pay commercial property leases. 
Hotels are Vacant
With restrictions on non-essential travel, the hotel and tourism industries are also taking a big hit. Since hotels rely solely on the patronage of leisure and business travelers, the mandates in place for COVID-19 have caused a significant decline in occupancy. Major hotel chains like the Marriott and the Hilton have had to do mass layoffs and have completely closed operations in pandemic hot spots.
Hotel honchos have seen occupancy percentages continue to decline every week with no end in sight. Should this trend continue, there is no doubt that there will be thousands of hotels going out of business in the near future leaving many vacant commercial properties on the market (with no one interested in making an investment).
Office Spaces Aren’t Being Utilized
In an effort to protect employees and reduce the spread of the coronavirus many organizations have vacated physical office spaces and instead implemented remote workforces to continue operations. Vacant office spaces, however, have caused some businesses to terminate their lease and/or try and sell their commercial properties to conserve money for more immediate needs.  
A remote workforce does save business execs money on expenses like leases/mortgages, utilities, maintenance, and equipment, but causes a rippled effect for other entities who provide business to business services. “Unfortunately, it’s obvious that commercial real estate owners are going through tough times. Many janitorial contractors from our association have reported losing business because of their clients urgently selling buildings or due to budget cuts”, says Molly Blackwood, the coordination manager at the International Janitorial Contractors Association.
Commercial Property Valuation Issues
There are rent-relief programs and small business loans that can be effective in helping commercial property owners in the short-term, however, with no real idea of when this pandemic will end, many are being forced to try and unload their properties. Unfortunately, however, selling commercial real estate has also proven to be a challenge during the pandemic. A major factor is the current valuation of commercial properties is declining. 
If you are one of the investors looking to dispose of your commercial property, note that the dent in the commercial rental income for the last few months can make the appraisal through income approach less accurate. According to this commercial property valuation guide by Sam McGrath, a commercial real estate analyst at PropertyCashin, depending on your property, it may make more sense to use alternative valuation methods. Methods like a comparison or cost approach (or their combination) to find the real value of your building.
Buyers Aren’t Interested
Even with a good property valuation, investors are finding it especially difficult to find buyers. As there are still no definitive answers on when the restrictions will lift or when a coronavirus vaccine will be developed, not everyone is willing to take the risk and invest in commercial properties right now. 
To invest in the purchase, construction, and renovation of a commercial property without knowing when it can start generating a return is essentially a poor financial decision for potential investors. As such, they’ve decided that it’s best to “wait and see” before they’ll close the deal on multi-million dollar contracts. 
“We are seeing a serious downward trend when looking at the number of users coming to our site to choose a local commercial construction service”, says Laura Bierman, the director of the North American contractor directory YouthfulHome.
The commercial real estate industry has an uphill battle on its hands as the coronavirus continues to change the landscape of businesses around the globe. Though there is some financial relief to help these organizations in the short-term, should this pandemic continue into the final two quarters of the year, recuperating could take investors months or even years. Hopefully, global, federal, and state mandates along with the cooperation of modern science and medicine, things can go back to “normal” sooner rather than later.