Coronavirus hits Florida development like an economic hurricane
The coronavirus pandemic is hitting Florida's construction and real estate industry with the destructive force of a hurricane, except perhaps worse, because hurricanes generally hit only part of the state.
That's the observation from veteran Tampa attorney Robert Stern, who co-chairs the real estate and loan transaction group at Trenam Law.
"This is an economic hurricane and it affects the entire state, not just a specific time frame," he said. Stern told the Tampa Bay Times that he sees "five profound impacts" on the Florida real estate industry, which the National Association of Realtors Association estimates accounted for $ 227.3 billion, or almost 22 percent of the state of Florida in 2018.
What is your assessment of how the overall impact of the pandemic will manifest?
The coronavirus has rocked Florida's property markets and perhaps even the world. It is now part of my daily conversation with clients in almost every real estate transaction we deal with. It reminds me a lot of the crisis of September 11th when everything suddenly stopped and nobody could have anticipated it.
In some ways, it seems more global than September 11.
Agreed. It is much more global, global, and severe than September 11. There are five main ways I think I have seen it affect real estate people.
No. 1, loans and financing are now unknown. All projects need not only materials, but also capital and cash. I have three or four hotels in different stages of loans, closings, construction. They are all uncertain. Some lenders have said, stop at any new hotel offer right now. Many lenders are being a little more cautious with their term sheets and commitments. I am only concerned about a loss of liquidity in the system. We do not want this to create a credit crisis similar to what happened in the Great Recession.
What is number 2?
Construction supply is a concern. It has been devastating for some people that China cannot give them any certainty of when they will be caught in the timely delivery of their supplies to the US. USA We cannot understand how many building materials actually come from China, and their delay becomes our delay. I simply believe that supply chain disruptions will have a tremendous negative impact on American builders. It is causing me and other attorneys to closely examine all contracts and discover what obligations, what responsibilities are documented in those contracts. If there are delays, are the delays justified? Are delays causing damage and liability?