The Coronavirus has now reached more than 70 countries and infected more than 90,000 persons worldwide. The impact of a mysterious virus to families across the globe is immeasurable. It is hard to imagine the grief or the fear one feels upon being faced with a severe health risk. My media channels are filled with news about the Coronavirus and its effects on everything from how one should wash their hands to the impacts on the global economy, while often forgetting that a lot of people are sick. 2020 will be a year of uncertainty and years of uncertainty will cause changes in behavior. For the better part of the year, the stock markets have jumped around like a 7-year-old at a bounce house and interest rates are continuing to reduce toward historic lows. 2020 will be a year filled with anxiety for families considering their health as well as their financial well being.
Since the start of the year, I have fielded a lot of questions about real estate investments in times of uncertainty. My general counsel is there is rarely a time of investment “certainty” in anything and real estate should be a part of every investor’s portfolio, especially now. Consider the following:
- Occupancies at Metonic offices and apartment properties are strong. Nationally, apartment occupancy was higher in 2019 than at any time in the past decade at over 94%. I suspect consumers will be less likely to move if they are less certain about the economy around them.
- With historically low-interest rates, our tenants are helping us pay down our principal debt very fast. The principal pay down is a return to investors which is often forgotten. As principal pays down, our risk lessens.
- By owning real estate, you own a piece of real property. The asset may have marginal swings in value but it is not going away. Metonic invests primarily in Midwest markets, as a result we are insulated from some of the volatility that occurs in larger markets.
- There is a market demand for fresh commercial real estate products for consumers to utilize. Much of this demand is from the 10,000 people per day who are turning 65 and young people that are looking for a more flexible lifestyle.
Successful investments require strong management in all seasons and markets. Metonic is always paying close attention to the health and safety of our tenants, investment partners, and associates. I am especially proud of the management partners that work alongside us to drive a terrific experience for those that live and work in our buildings and a great result for those that invest in them.