CREJ

May 6-19, 2020 - Page 33 www.crej.com COVID-19 L ike every other industry, Colorado’s real estate and development sector is reeling from the impact of COVID-19. Big openings have been put off. High- profile deals have been delayed or cancelled. For many local busi- nesses, reopening isn’t a certainty. Landlords are facing questions from tenants in financial trouble. Buyers are hesitating. Everyone is hoarding cash. Predictability is a thing of the past. How will Colorado’s real estate and development community react?Howmuchwill it overreact? I’m a local developer and prop- erty manager. Colorado is and always will be my focus. My wife Jennifer and I cofounded Central Development in 2005. Our com- pany is responsible for more than 3 million square feet of industrial, medical, retail, hospitality, multi- family and single-family proper- ties across Denver and the Front Range. We, too, are facing chal- lenges we never could have fore- seen. We are lucky to have a stable portfolio and diversified tenant mix. The bulk of it is industrial, medical and multifamily. We’re also lucky to have multiple lines of business. Even when develop- ment and construction start to slow, buildings always must be managed andmaintained. We’re lucky, but we’re still wor- ried. What’s my biggest worry? People over- r e a c t i n g . Overreaction breeds doubt, mistrust and negative out- comes. Over- reaction won’t help us find solutions or opportunities. We are fig- uring out a path forward. We are staying calm, projecting confidence and trying to ensure that emotions aren’t driving our decisions. Just like so many other Colorado developers and prop- erty managers, we will survive this. We’ll do it through relation- ships, working together as a local community and sharing ideas. By sharing how we’re reacting, we’ll help each other avoid overreact- ing. Where are we focused? What have our biggest hurdles been? What solutions have we found? Our biggest concern is doing right by our team and our tenants. In difficult times, how you treat people matters. Tough times chal- lenge existing relationships. Tough times also create opportunities to formand strengthen relationships. COVID-19 has been hard on our team. One of our teammembers is on a ventilator. Another has a son at home fighting late-stage cancer. He can’t help fearing he’ll bring coronavirus home to his son. Operational changes are help- ing us limit our team’s potential for exposure. Only one person per property at a time. Building engineers work independently on separate properties. Building managers work split shifts so they never see each other in person. We’ve created isolated work envi- ronments for team members with higher risk of complications from COVID-19. Leasing offices are closed to the public. If people are sick, they can’t come intowork for at least aweek. But they can remain confident their paychecks will keep coming. In support of this commitment,we took advantage of the Small Busi- ness Association Payment Protec- tion Program. Maintenance changes also are helping us reduce risk. We have added hand sanitizer stations at building entrances, and midday cleaning of all common areas. In certain circumstances, we’re offer- ing specialized deep cleaning. We no longer perform nonessential maintenance work in occupied suites. Our construction sites are 100% mask-required, and we have added handwashing stations. We proactively manage subcontrac- tors to minimize the number of trades in a unit simultaneously. We are working with tenants who reach out for rent abate- ment. While the rent must get paid, we’re working out payment arrangements where needed. We’ve provided several tenants with information about govern- ment assistance options. We look at all tenants and buildings on a case-by-case basis. Because our company is small and local, we are able to make deci- sions and changes quickly. Whilewe always have provided timely, clear investor communica- tions, we’re more focused than ever on constantly communicat- ing with our investors. Everyone deserves the full story at all times. Even when the news isn’t great. Some deals in their infancy have stalled or are moving slowly. For- tunately, our in-progress deals still are moving forward. We are being careful with cash management, making distributions judiciously. We are making sure our inves- tors and tenants know: Our com- pany is not going anywhere. We’re continuing to attract ten- ants, leasingunits andsigningcon- tracts. We recently broke ground on Phase 4 at our Platte 56 town- homes in Littleton, and we contin- ue to be successful with sales. At Encompass Business Park in Cen- tennial, we successfully leased one of our new industrial buildings to Winn-Marion and Mygrant Glass. We also plan to break ground this summer on another 171,000-sf industrial building in the park. Ultimately, the COVID-19 pan- demic is likely to increase demand for industrial space. Broker T.J. Smith, who assists with tenant leasing at Encompass, said, “I’m happy to be an industrial broker right now, versus handling a dif- ferent asset class. Industrial prop- erties seem to have the brightest outlook aswe come out of this into the third or fourth quarter.” He explained, “What’s trans- pired through this is that we’re going to see an increase in ecommerce sales, manufactur- ing companies and companies holding larger inventories. Nationally, it could create almost a billion square feet of demand for ecommerce and inventory supply. If that hap- pens, parks like Encompass will benefit. So yes, these are challenging times. But indus- trial will come out of this doing better than other asset classes.” Real estate is a business of risk. Obviously, we have reduced our risk tolerance. We are focused first on stabilizing all in-progress deals. But we absolutely are looking toward the future. The downturn in equity mar- kets makes it likely that investors, buyers and sellers will continue to seek real estate opportunities. We A local firm’s perspective: We’ll get through it together Jeremy Records Principal and cofounder, Central Development Please see Records, Page 37

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