Brandon Mendoza, right off the top, assured his online audience that he is not Nostradamus. Outcomes of his predictions may not materialize.
But, as executive director of NAIOP Pittsburgh, he did provide an authoritative outlook for commercial real estate in Southwestern Pennsylvania during the COVID-19 recovery.
“The real estate industry will be most impacted,” Mendoza said Thursday, during a Washington County Chamber of Commerce breakfast briefing via Zoom.
“I’m not a commercial real estate expert, but I have a lot of insight. These are unpredictable times in all industries. There will be short-term winners. The long-term situation is uncertain.”
Mendoza heads the Pittsburgh regional office of NAIOP, a national trade association of commercial real estate developers, owners, investors and professionals, based in Herndon, Va. Commercial real estate-wise, he believes Washington County and Southwestern Pennsylvania “are positioned well” for a rebound.
Industry and warehousing, he said, are “bright spots” in the short term. “From Amazon to Target to Walmart, if you have an online market and you move a lot of product, you’re a good bet. Demand now is going through the roof.”
Outlooks for labs, medical and construction have positive prospects as well, Mendoza added. Gov. Tom Wolf announced that week that construction, with strict guidelines can resume May 8.
The office segment, according to Mendoza, may take a short-term hit. “Long term, it’s unclear. We could see a situation where firms need more square footage for fewer people, with a move toward more walls and more space between employees.”
He did, however, dismiss speculation that the pervasive work-from-home edict will lead to “an end to the office. I don’t think we’re there.”
Mendoza said initially, he can envision more individuals working remotely, with staggered shifts and days off. But because “relationships are so important in offices, once we see the spread (of virus) controlled, we’ll see a bounce-back of office uses.””
Hospitality and brick-and-mortar retail may face short-term challenges, in his estimation. “The hospitality sector could be in jeopardy short term. They’ll need federal and state support. Brick-and-mortar retail folks could face trouble, but it’s hard to say what will happen long term. Retailers with an online presence and groceries could do OK. A clothing retailer, who depends on a lot of foot traffic, could be hard hit.”
Mendoza compared the region’s current financial straits with those of the Great Recession, from which Southwestern Pennsylvania rebounded reasonably well. He cited the diversity of industries as a reason why this area could arise in similar fashion.
“Our region has a diversified economy, not one in which one industry will see outsized growth. Washington County has done a good job diversifying. Energy has been a big part of the equation, but it has other industries. Washington County and the region are positioned well.”
So well, Mendoza surmised, that Southwestern Pennsylvania could “see a V-shape” recession. That, according to forbes.com, would be “the best-case scenario for the COVID crisis,” with the economy rebounding “as quickly as it has declined, with minimal long-lasting financial damage.”
Without predicting anything, the NAIOP director closed by saying: “We have to stay engaged to get to the other side of this, then we could see one of the fastest recoveries.”