The Maine Real Estate and Development Association holds an annual “look-ahead” conference on Thursday. It’ll be online, of course.
Morning Edition host Irwin Gratz spoke with Shannon Richards with Hay Runner, a real estate servicing company, and vice president of MEREDA about how the pandemic-induced slowdown has affected various sectors of the real estate industry.
This interview has been edited for clarity.
Gratz: One area that seems unaffected has been housing.
Richards: Yeah, I think there was a bit of a shutter. Realtors and real estate transactions were not considered an essential service right at the beginning. In residential, I think there’s been an exodus from some of the nearby urban centers like New York and Boston. So we’re seeing the influx of need for housing here.
We certainly have heard that some smaller businesses have been in trouble as a result of the pandemic and the economic disruption. What’s been the impact on the commercial real estate market?
There’s a lot of drivers. Marijuana, the cannabis industry, is a part of the commercial market, and that is driving income into a sector that you would think would be really suffering. I think retail and restaurant is where you see some really big problems. But if you come to the conference, you’ll hear some things that might surprise you. It is interesting. For instance, Athleta leisurewear in Portland is doing really well, because everybody’s doing meetings with their sweatpants on apparently.
Or getting outside for that daily walk.
Right, yeah, the roads are filled with walkers these days. So it depends. Our friends who own restaurants in our communities are struggling. That is a big deal.
Are there other sectors of the real estate business that have been particularly affected in one way or another?
Yeah, I would say that on the receiving end of the worst effects in our marketplace, in our industry of real estate, would be the hotels. I think we’re going to see in 2021 the results of some of the hardships of last year — from people who were hanging on in any business. The last time we had a major upset in the economy, what it does is it really kind of shakes out the the clingers, the people who are barely clinging on, the businesses that are barely hanging on. And then it does sometimes catapult some people into new positions. And we see economically people really can benefit and businesses can benefit from an economic upset.
Going into the pandemic and this slowdown, there was a lot of talk about construction costs that were rising sharply. Is that still an issue for developers who are trying to build?
There was an adjustment over the last few years that was really hard on developers, due to the labor retiring, lack of labor, materials, especially metal, coming back in. Everything gets shipped to China, and then they have to ship it back to us. So we’re really seeing a lot of our materials going up. We saw a reset, maybe 30% over a couple years. Now we’re seeing that hold. But we had a delay of getting materials from Canada, the borders were shut down.
Well, as you peer ahead to 2021, How does it look to you?
I think there’s going to be problems. I think we’re gonna see the results of the issues from last year. There’s going to be sectors that have hard times, but I believe that overall, the economy in Maine, and the industry of real estate design, construction and development is actually going to be in a pretty good position in 2021.