New Hampshire commercial real estate figures are nervously eyeing the possible reopening of the state’s economy later this spring, hoping it may ease the burden on tenants, landlords and lenders amid the coronavirus crisis that’s brought most non-emergency business to a standstill. 

Gov. Chris Sununu, who earlier this month announced he was cancelling the rest of the school year for students, has indicated he may extend the current stay-at-home advisory set to expire on May 4 for non-essential businesses – and many CRE officials say that caution is the right move. 

“Personally, I think we have to wait it out a bit,” Bob Rohrer, New Hampshire managing at Colliers International, said of tamping down the spread of the virus before lifting social-distancing restrictions. “We need to do this right. But I think, or hope, by around mid-May we can maybe start doing some things to get the economy going.” 

And that would mean at least a partial reopening and lifting of social-distancing restrictions, whenever that officially happens. 

But the big question: How much economic damage has already been done by the coronavirus emergency – and how much business activity will there be after a partial reopening?  

“The economy is so fragile,” says Bill Norton, president of Norton Asset Management, a CRE brokerage and advisory firm in Manchester. “The key is the next two or three months – whether it will be a V-shaped, U-shaped or hockey stick [-shaped] recovery.” 

Volume Dropped, Then Stopped 

To be clear: There is activity going on within the commercial real estate sector in New Hampshire. But it’s mostly focusing on talks between sometimes frantic tenants, landlords and lenders about deferring or reducing rents and mortgage payments on a month-to-month basis. 

Chris Norwood, president of NAI Norwood Group, said data he’s seen shows that lease and sales transactions dropped 25 to 30 percent in the state soon after it became apparent in March that the coronavirus was spreading and that social-distancing restrictions would be needed.  

“People hit the pause button,” he said. 

Then, most long-term lease and sales activity came to a virtual halt after restrictions were announced – and retail, industrial and office tenants started reaching out to landlords about April rents, he said. 

“There have been a lot of conversations, particularly among retail and restaurant [clients],” said Chip Brown, owner of Brown Commercial Realty in Hanover.  

Non-take-out restaurants are in desperate straits – and restaurateurs are asking landlords for rent relief, Brown said. Most of the time, landlords have been sympathetic and flexible, often offering rent deferrals to restaurant tenants, market-watchers say 

Whether talks involve retail, office or industrial players, negotiations have been carried out via a flurry of social-distancing phone calls, emails, texts and remote Zoom meetings, CRE brokers say. 

‘Trickle-Up’ Economics 

But it’s not just tenant-landlord talks. Many commercial property owners have mortgages to pay – and so banks and other lenders are getting dragged into the mix. 

Rohrer of Colliers International called it “trickle–up” economics, as Main Street businesses express their concerns to landlords, who then express their concerns to lenders.  

“Banks seem to be listening,” said Rohrer.  

One bright commercial-real-estate spot: Office tenants seem to be holding out somewhat well, at least compared to retail and restaurant tenants. 

“I don’t know of any office tenants saying, ‘Oh, I’m not going to pay my rent,’” said Brown. 

Indeed, Norwood of NAI Norwood Group said office tenants are “better sheltered” from the coronavirus emergency, since at least some of their business can be conducted remotely.  

Still, there have been tense moments within the office sector.  

One national firm with offices around the country initially told a local landlord that it wasn’t paying its April rent and “the landlord responded ‘no,’” said Norton of Norton Asset Management. The tenant backed down when it became apparent federal loan money would be available to firms in need of cash, Norton said. 

What Happens Next? 

As for what happens after a partial reopening, most agree that restaurants and retail will continue to suffer.  

For health reasons, many nervous consumers may balk at going to public places, particularly in confined spaces like sit-down restaurants. Then there’s the issue of whether there will still be social-distancing restrictions for restaurants and retail stores, such as limits on occupancy rates. 

Also, the surge in unemployment in New Hampshire and across the country will likely cut into discretionary spending, further harming restaurants and retail shops, industry officials say 

Norwood said he expects the larger CRE markets– such as Manchester and Portsmouth – to come out of the current shutdown somewhat well, due to their larger and more diverse business and clientele mix. 

But he said smaller markets, which rely more on “local traffic” for business, may face a harder time recovering.  

“I see possible trouble for smaller downtowns,” said Norwood. “Those are the ones that may have problems.” 

Norton said he knows of some multimillion-dollar deals that fell through at the outset of the coronavirus outbreak, but he said he’s guardedly confident they’ll return to negotiations, assuming the economy doesn’t continue its nosedive. 

“The challenge is if we’re locked down for two to three months,” Norton said. “It’s just too early to tell what might happen.” 

Brown agreed. “If the [shutdown] lasts one to two months, fine. But if it lasts longer, there’s a lot of risks out there.” 

He noted that businesses – and thus the commercial real estate sector – have never gone through economic times like the current crisis, with all its unknowns and unique problems popping up.  

“It’s become the ‘Twilight Zone’ every day,” he says.