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CRE Magic Minute – Episode #2

We are still feeling the impact of the recession although it began in March of 2020, triggered by COVID-19.  After economic activity had collapsed at a record pace in Q2, it rebounded almost as sharply in Q3. By the fourth quarter, the pace of recovery had slowed some and performance was still not at pre-recession levels.  As 2020 unfolded, we saw a sharp increase in the amount of sublease space available in the office market. Compared to the end of 2019, with 62.6 MSF of sublease space on the market, the volume of such space had nearly doubled to 111.9 MSF only one year later—the largest amount of sublease space available since Q3 2003.  Asking rents are likely to decline in the next few quarters as owners face pressure from a rising volume of flex space. It is anticipated that it will be a couple of years before national rental rates begin to appreciate again in the aggregate.  





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GWCC is a Temp Hospital for COVID…Again

Georgia authorities began using the Georgia World Congress Center as a temporary hospital in April of 2020 to handle COVID-19 excess patients. The focus of the center is on the patients with mild to moderate coronavirus symptoms. Per Georgia Emergency Management Agency’s Deputy Director Mark Sexton, “The intent is to let the local area hospitals have a location where they can move the patients out that are beyond their most critical needs, and place them in this facility so we can let them complete their recovery. It looks like a hospital.” The governor has acknowledged that moving more patients with coronavirus to the GWCC would help to relieve the burden on state hospitals.

Recently, with coronavirus hospitalizations growing to record-breaking highs, Governor Brian Kemp is reopening the facility after it closed on May 16. When it was initially opened, it was in anticipation of an expected peak of cases around April 26. The peak never fully developed, however, and the hospital was broken down. The state reported a single-day record high of 4,484 new cases on Friday, and the alternative care facility was contracted back into use, with an expected addition to the infrastructure of nearly 100 ICU beds.

As 82% of Georgia’s critical care beds are in use, hospitals are rapidly reaching capacity. Emory Healthcare claims hospitalizations of COVID-19 patients have tripled in the past two weeks. The state, in addition to the care facility at the Georgia World Congress Center, has sent mobile care units to Albany, Rome, Gainesville, and Macon.

While more and more hospitals are approaching maximum occupancy and cases continue to increase, it seems that for quite some time we may not hit the peak. Per Governor Kemp’s office, “The state is coordinating and paying for increased staff at dozens of healthcare and long-term care facilities across Georgia. We are supplying personal protective equipment, working with local leaders, and projecting future needs in accordance with the Department of Public Health’s guidance at every turn.” If we keep going in a similar direction, we will leave coronavirus in the past and move forward with a stronger, safer, healthier future.