Recovery of the Commercial Real Estate Market:

• Policy: The Chinese government’s strong response in addressing the spread of COVID-19, including a recent RMB 1.7 trillion injection into the economy and other possible future measures will help to support long term market confidence;
• Office properties: Remote working will alter the office workplace, companies in industry sectors, such as TMT, Healthcare, Finance and Retail (retailers with a strong omnichannel presence) will be office occupiers which landlords will target, and wellness will be prioritized;
• Retail properties: A fully functioning and optimized omnichannel presence will be a must-have item, retail digitization/data intelligence will be developed further, and retail marketing models will be transformed;
• Industrial properties: Industry 4.0 will be further adopted and integrated, and demand for premium logistics space will be boosted;
• Data center properties: Given the greater use of the Internet during and after the COVID-19 outbreak, demand for information processing and storage will rise. This will also mean demand for rack space in data centers will increase;
• Hotel properties: Service quality and cleanliness will be of the utmost importance after the COVID-19 outbreak as these two factors will be key for hotels in gaining the trust of guests, and in turn, a rise in a hotel’s occupancy rate;
• Residential properties: Many residential investors and developers will have to consider incorporating a home office area into their residential property development unit plans as well as intelligent parcel drop boxes to serve the residential community as a whole, and;
• Property investors: Gateway first tier cities will continue to remain important destinations for property investment in China.

——Shaun Brodie, Senior Director, Head of Occupier 

Research, Greater China, Cushman & Wakefield

Companies like S.F. Holdings and JD.com have outperformed other counterparts thanks to their substantial investment in self-operation and extensive technological capabilities. From the landlord side, most landlords haven’t provided rental concessions to the tenants by March 6, though some of them are discussing that possibility.

Industry trends: demands for investment-grade warehouses, in particular cold chain spaces, are anticipated to grow continuously. Central governments’ new QE plan and accelerating logistics technology advancement will boost the data center sector.

Market momentum: the warehouse market is getting more complicated as more new players were entering the market from the previous user group, for instance, retailing and logistics companies.

Investment outlook: logistics and industrial real estates in tier 1 and key tier 2 cities will remain to be popular investment targets given the capital rate gap comparing to other real estate sectors.

—— Kate Yang, Founder, Rhymes Consulting, 

ULI Full Member 

• The main change of investment contract is the increases of new clauses that deal with changes in transaction process caused by the coronavirus;
• EPC contracts often have detailed terms for project delay, and the owner and the EPC should discuss and resolve their problems according to the existing contract;
• During the outbreak, the main problem appeared in the leasing market. According to our experience during SARS outbreak, the court inclined to give retail tenants a better position, but the principle of the judgement is the principle of fairness rather than force majeure. Retail and office owners are advised to communicate with tenants actively, establish corresponding settlement processes and systems, and proactively prevent potential business conflicts.

—— Eric Liu, Partner, Dentons, ULI Full Member 

Suggestions for the management of HVAC systems:

• For all air system with air return, the return air should be completely closed to ensure the system’s fresh air operation.
•  When the central air system is operating, the air supply and return air terminals should be disinfected regularly.
• During the operation of the central air-conditioning fresh air system, if the virus appears, do not stop the fan. After the personnel has evacuated, the branch pipe of exhaust air should be closed. After operating for some time, the fresh air exhaust system should be shut down and disinfected.

——Stanley Du, Group Account Executive, 

Central China, Corporate Solutions, JLL

• Diagnosis: How is the environment? Natural ventilation effective? What type and how is the air-conditioning system? Any operation process set up correctly to prevent COVID-19?
• Treatment: 1st priority is recovering the original system, but not adding new technologies or products.
• Measure & Verification: The short-term monitoring is site measurement carried out by professional, while long-term can be supported by IoT. Related indexes are fresh air quantity and quality, filter efficiency, PM2.5, temperature, humidity, etc.
• Stay Healthy: A special manual of the central air-conditioning system shall be developed to protect tenant. Based on that, training program is critical as well to help facility staff to operate the system correctly.

——Roger Qian, General Manager, HARVENCY, ULI Member