Profimex Market Review Update – October 21, 2020

21.10.2020

An Uneven Recovery Is Likely for Hotels

While many real estate asset classes that were initially hard hit from Covid-19 have begun to recover, the recovery for hotels, as an asset class, continues to be hampered by a depressed travel market and continued Covid-19 outbreaks. In turn, this has caused a sharp drop in the volume of new deals occurring in this space. There are several factors contributing to the decrease in deal flow, beginning with a strong mismatch between buyers and sellers on pricing. Additionally, government relief is playing a role in poor deal flow as investors are uncertain about what will happen when government relief decreases or expires.

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Coworking Operators Leaning More On Daily Users To Boost Occupancy

As offices remain closed or partially reopened, due to Covid-19, many office operators, specifically coworking space companies, are shifting their focus to more short-term users who rent spaces for daily usage. “We’re seeing the parents who have kids at home, the people who need a place to get out, but you can’t get out of the house or do not want to get out of the house every day,” Global Workspace Association Executive Director Jamie Russo said. “The I-do-not-want-a-30-day-commitment customer. ‘I only want to pay for what I use.’” Even prior to the Covid-19 economic crisis, the coworking industry was experiencing challenges, such as a decrease in price per desk space. With the pandemic, demand for daily rentals and other factors have been pulled forward as a result. Today, Russo explained that he is starting to see a recovering in the coworking industry, primarily coming from the suburbs.

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