While national indicators are mixed on the health and short-term future of the economy, locally, commercial real estate agents and lenders are seeing some promising signs.
At Towne Center, lease negotiations are underway for three spaces that were vacated in recent months—Portrait Innovations, Kirkland’s and, most recently, Lane Bryant.
Jonathan Walker of Maestri Murrell Commercial Real Estate, which handles leasing for the center, declines to say who the potential new tenants are until the deals are finalized. But he says they include local and national retailers who are still bullish about the market.
Tenants at the center have gone back to paying full rent, after seeking reductions during the early months of the pandemic and economic shutdown. Anecdotal evidence suggests a similar positive trend at other retail centers, he says.
“A lot of the national tenants were given price breaks by their landlords,” he says. “That has all ended.”
Matthew Laborde of Elifin Realty has also seen positive signs of activity at Hammond Aire Shopping Center, where his firm handles leasing. The center has just one vacant space and has received “a lot of interested” calls about it, he says.
Dottie Tarleton at Stirling Properties says some segments of her commercial business have returned to pre-pandemic levels.
On the lender side, requests for deferrals of monthly real estate loan payments have decreased significantly in recent months, says John D’Angelo, president and CEO of Investar Bank. At the end of last week, the bank’s deferral rate was less than 4%, down from its peak of 33% earlier this year.
“Our real estate customers are not asking for additional deferments,” he says. “In addition, as of now we are not seeing an uptick in delinquency.”
While that’s all good news, D’Angelo and others caution it’s still too early to proclaim an end to the months of economic worry. The restaurant, hospitality and entertainment sectors are still in a major slump that shows no sign of ending.
Laborde, typically an optimist, says given the struggles of small restaurants and bars, which have been hit particularly hard, the first quarter of 2021 will likely bring a lot of economic pain to the retail and real estate sectors.
“I think there are going to be a lot of distressed situations and you’ll start to see bankruptcies,” he says. “Lenders don’t want to take properties back on a temporary basis, so everyone is trying to work with each other right now, but that’s eventually going to end.”
D’Angelo isn’t sure it will be all bad, but he says it’s too soon to know for sure.
“Although our loans have been flat over the past few quarters, excluding the PPP, we are starting to see a slight pickup in our pipeline,” he says. “If this were to hold, it would indicate customers are starting to see some clarity. The fourth quarter and first quarter of 2021 will give us a feel for how good or bad the economy is going to perform.”
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