No one can accurately predict how long the Coronavirus will last or when effective vaccines can be rolled out, so all we can do is speculate, based on some logic and our past experience with SARS, which seems less serious and less deadly than this new potential pandemic.

Logic and history suggest that the most immediate effects will be 1) significant interruption of all supply chains, 2) significantly less travel, and a fear of all crowded venues, 3) likely over-reactions in the capital markets affecting stocks and our estimation of wealth, 4) possible government interventions to assist affected industries, especially in China.

How will each of these affect real estate markets? Starting with the most obvious:

• Hotel occupancy will drop along with conference center utilization. Tourist cities will be more impacted than other metros, and restaurant dominated retail will suffer.
• Flights will be cancelled, when too many travelers on a flight cancel, and this will impact our ability to meet business commitments, which may cascade into even more cancellations of meetings and events. One beneficiary of these cancellations will be more use of video conferencing and alternatives. 
• Sporting venues will be cancelled, which will in turn, further dampen hotel occupancy. How long that will last will depend on when the virus peaks out, but if history is any guide, the worst impacts will last no more than two quarters. 
• Supply chains will interrupt production all over the world, and while manufacturing will be delayed, we will make it up eventually. It is not the percentage of parts that matters but rather the inability to replace critical parts with domestic/local suppliers that matters. The same is true for physical retail goods, these purchases will be delayed and most will be made up, but some business will be lost forever, like fitness centers, movie theaters, and restaurants. 
• Work will be disrupted if child-care centers and schools close down, and this would be the most severe signal that the virus could drive the US into recession. The US is unlikely to hit recession if schools do not close, defined as two quarters of negative GDP, but could easily dip to a negative GDP for a quarter and/or a very low GDP for all of 2020. Again, school closings for more than a few days will be the signal that work will be seriously disrupted and a recession not too far behind.  The office market will likely see an increase in flexible work scheduling and more telecommuting from home. To the extent, firms resistant to telecommuting, accept and learn to manage remote workers, this will result in a larger permanent home-based workforce, now at 10-12% and perhaps reaching 15- 20% over time. If managers learn how to better manage telecommuters via video conferencing and frequent online meetings the office market vacancy rate, now at around 10% could rise to 13% or more.  Co-working will continue, but with far fewer social functions.
• The US economy in 2021 will also be negatively impacted as the stock market pull back will delay new or secondary stock issuance, which will delay investment and expansions and slow new hiring. The unemployment rate will climb starting in the spring of 2020. 
• The stock market decline will also impact the high-end housing market, which is tied closely to overall wealth, and has already been hit by state and local tax limitations under the last tax revision. Some retirements will be delayed as people watch their 401ks and IRAs decline. 
• After hotels, the next most impacted property type in the short-term will be bulk port warehouses that deal with imports of construction materials and car parts and electronics, while local warehouses servicing the last mile will benefit from a surge in e-commerce as people shop more on-line and less in person, to the extent that inventories are produced locally. Grocery shopping on-line, which has been resisted by most of the population, will surge and this may have long lasting effects on one property type that has been considered ecommerce resistant, the neighborhood shopping center anchored by groceries and pharmaceuticals. Thus, retail property will be affected, and while it may be temporary with much shopping simply postponed, some effects will linger on forever.
• Construction will be delayed as new replacement supplies are sought, and this will hurt construction efficiency as starts and stops do not allow for streamlined project management. 
• Meanwhile, low interest rates will make refinancing and new acquisitions attractive and the volatility of the stock market should steer more capital into real estate, supporting most values, especially in the multifamily market and the last mile industrial market. 
• Retail and office cap rates might witness higher cap rate spreads, but the low treasuries will likely keep cap rates down. 
• Unemployment uncertainty and business investment delays will cause some delays in home buying, but again the low rates will likely offset this among those who can move up, and have not been hit too hard by stock market declines. 
• The next several months will be a good time to pick up property or homes from those in panic over-reaction mode. The best advice is don’t panic and do anything rash. If you get sick you have at least a 97% chance of regaining your health. That brings up the property type most benefitting from the virus, funeral homes, but that is a dying business so it is best to steer clear.