A sincere thank you to Keith Largay, Terri Haymaker, Molly McShane and Jon Talty for contributing over the past six weeks – your thoughtfulness became a comforting way to start the week!  I have received such an overwhelming response to this news piece that we have decided to continue it, with Mary Ludgin at the lead. As we move forward, I hope Mary will continue to provide a touch of humor (which we all need!) as well as a global perspective.  We will add new voices and dig a little deeper into topics, both big and small, that are feeling the impact of a changing world with new rules and few answers.

Stay with us – it will be good!
Cindy McSherry | Executive Director | ULI Chicago

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Tales From the Front Line | April 27, 2020

MARY LUDGIN
Senior Managing Director & Director Global Investment Research | Heitman LLC

My computer is acting up. I cannot get into my email via my laptop. Of course, I can access it from my phone but it is hard to read documents on such a small screen. The same problem happened Sunday afternoon but I figured out a workaround and forgot about it. On Monday morning, I thought I had given myself ample time to log in before a 9am interview via Zoom for a conference that have turned from in person to virtual. It was 8:45 and I once again had no email access. Hence, no Zoom access other than through my phone. Thirty-three minutes after the official start time, the interview began with me on my LAND LINE, guided via texts on my cell phone. So great that we procrastinated on cutting the cord.

My IT department fixed the problem soon after my old-tech interview ended on Monday. Now, five days later, it is happening again, reminding me how tenuous working from home can be. UPDATE. Computer problem resolved! I will not have to figure out another way besides email to get this document to Cindy.

Working from home is getting old. For as much as former Massachusetts Senator Paul Tsongas was right when he said, “on their deathbed, no one ever said that they wished they had spent more time at the office” he hadn’t lived through this time. I am eager to get back and, like many of us, frustrated that I can’t because this scary, silent killer of a virus can’t be wished away. The reach of COVID-19 is now 185 countries. Seeing that awful statistic made me look up how many countries there are in the world. By Wikipedia’s count, there are 195 countries in the world. COVID-19 has swept the globe.

Five weeks into our lockdown, we still have only a vague idea of what happens next, other than that someone will hurt themselves trying out the Lysol cure. The GFC taught those of us in the real estate investment management business the steps to take in the aftermath of an economic shock. Property owners are contacting their lenders about upcoming loan maturities; asset managers are reviewing what capital expenditures can be delayed; property managers are reaching out to tenants to help bridge them to a better time. And we’re laying out scenarios for what the next six months, next 12 months will look like in our economy and in the property markets. But we still haven’t a clue as to which scenario is most likely to occur.

Molly McShane
Chief Operating Officer | The McShane Companies

Much like last week, we continue to operate both of our construction businesses and our development business in a more stable environment. While we proceed to put current work in place, we are also focused on signing new work and maintaining a healthy backlog of business. Because of the long lead times necessary to build most buildings, the construction industry typically lags behind the rest of the economy. As a result, 2021’s numbers may show the adverse effects of Coronavirus more so than 2020. Our business was challenged this past week as some states, in our view, are prematurely opening up and putting our employees at a higher risk than we are comfortable with. We continue to respect CDC guidelines and are operating all of our job sites and offices nationwide within those recommendations. As I said last week, detailed planning is underway for how to open up safely when the right time comes.

Industrial development continues to be in a moment of pause. Although there have been some notable new e-commerce leases signed recently, non-e-commerce leasing is slow. Most sales of both land parcels and cash-flowing assets are on hold, as substantial discounts have not yet been presented, but more nuanced pricing in this new environment has not yet been triangulated. Underwritten lease-up time frames and rent growth are both becoming more conservative. Non-recourse lending seems to be less widely available in the short term. That said, industrial real estate is widely expected to be an eventual beneficiary of increased long-term demand. Those who time it well will come out of this successfully.

JON TALTY
Chairman & CEO | OKW Architects, LLC

Dear ULI Community,

It has been a real pleasure sharing my thoughts with you over the past six weeks.

This exercise in reflection and strategic prediction has been cathartic as I try to navigate how COVID-19 has profoundly affected not only my own life, but the state of my office and profession. Having worked in the industry for 35 years, I know that architects get hit especially hard during profound social and economic disruption. I remember an article in the New York Times published during the Great Recession that said that anyone looking for an architect could best find one by hailing a cab.

Given how susceptible the profession is to the vicissitudes of global events, some might say it’s not for the faint of heart. It is however, best suited for those whose passions motivate them to make a difference in our built environment. The past few months have reminded me of this and reinforced the notion, especially in the wake of a global upending, that design matters.

Thought leaders in every corner of our rich and diverse design community are playing an outsized role in addressing how the built environment will change to mitigate the next pandemic. These include how we navigate streetscapes and transportation options; the progression through buildings that we call home or work; the unintended “collisions” with co-workers in conference rooms, corridors and even restrooms; and how we shop for goods and services. As artists, designers, and engineers, we need to take the responsibility seriously and head on. Thanks to our commitment to improve lives through design, we will bring to bear the best of our craft to ensure that this new normal is more than a reaction, but a fundamental improvement to the way we engage with the world.

In the short-term, the top minds and organizations have feverishly started authoring game plans for Day One (“Year Zero, AC” to give it a sci-fi spin), when we all return to our offices and the lives we once knew. It is still a guessing game as to what will truly happen and to what degree. Finding the best solutions will require smart, creative, and fluid thinking along with confident and collaborative voices. These are the same qualities we seek in our team at OKW Architects. Although we are all going through trying times in many ways, I am thankful and proud to find meaning in what we do and the influence we have.

The days ahead will challenge us in ways we have yet to understand. But speaking for architects in Chicago and around the world, bold changes are in our DNA, and we are ready for whatever the future may bring.

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If you have questions or want to share your thoughts, email us at [email protected].