Observations:

For a year when America lost almost as many people as the total lost in all wars since 1900 (WWI, WWII, Korea, Vietnam, Gulf War, and the War on Terror) I feel surprisingly safe and lucky. I know many people who have been sick with COVID-19 and close to 20 people (friends and family of my friends) who have died. My family has come through basically unscathed other than some inconveniences caused by working from home. We are truly blessed. We have been very cautious and careful, even with our second doses of vaccines. I think that is a fair assessment of how most people are behaving and how our economy is going to recover –caution remains.

Novus commercial (office and multifamily) developments have been split experiences. Anything that was underway prior to the pandemic, including transactions with deposits, continued almost business-as-usual. New activities and transactions that began before or during COVID have been brutally slow. Multifamily is coming back as strong as ever, office is waiting to see how tenants will reoccupy space and proceeding with caution. As a vertical developer, Catellus has our next office building in design, and we were able to purchase the first retail space in Novus during COVID. Hospitality and retail are still trying to figure out what happened and how to behave next. Like office, tenant demand will dictate the terms of the recovery for retail and hospitality uses and for now optimism is limited to the strong. We are starting to get new deals into escrow, some of which were ready to go to contract a year ago.

My reflections on the year are surrealistic. Never in my life have the differences between politics and practical reality been so opposed. Politicians saying what we can and can’t do versus, what we should or shouldn’t do confused many. Never have common sense and good judgement been more important.

Opportunities:

This is my fifth megatrend/economic experience and I believe there are patterns to learn from and trust. Whenever I hear “Things will never be the same again,” I can be confident that it will be close to the same again soon. We’ve heard it before – “We’ll never see single digit interest rates,” “Companies will never need office space again,” “Brick and mortar retail is dead.” People are sick of working from home. We miss going to a nice restaurant – or any restaurant at this point – getting to choose a meal and have someone else clear the table and do the dishes. My wife and I are empty-nesters and managed working from home easily – but I miss my team and office comradery, and since my wife has always worked from home, she wants her house back. I can’t imagine sharing the space with young children and classroom Zoom calls – I commend all the parents and families that have had to adapt and adjust! Yes, some jobs will remain at home, but most will return to offices even if it’s only a couple days a week. Because at the end of the day, people need variety. Until then, we will wait it out and hope for the best. Oh, did I mention we signed our first retail LOI this week! “Things will never be the same.” Agreed. I think they may be better because we will appreciate them more. Stay healthy – I’ll see you out and about soon!