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00:00Back in April May I know it felt like it felt absolutely catastrophic. There were when we were talking about commercial real estate assets people were taught about doors. Not even a bed. There was no way to make a mark because it just wasn't even happening. Nothing was moving as we close out the year. Is there a greater sense of where the markets are on commercial real estate assets say in the city center. Or is it still. Do we still need time to really appreciate how things are going to shake out. Yeah I think you know we definitely need a couple more months to see how consumers shake out because the biggest variable for how the workforce is going to come back is the vaccine. Right. And we still haven't had a widespread vaccine which we won't know what percentage of the workforce goes back full time. What percentage goes back on a hybrid schedule partially working from home partially in office and which positions are permanently held remotely. So until that happens I think we're still in a holding pattern. And the fallout up here. I mean obviously I'm in New York City and you know you walk around this city and you see not only the office buildings up to you but a lot of the retail spaces and the restaurant spaces are empty now. Let's assume for one second we do get to a stage in the next year or so where people are back to their normal day to day lives here. What type of shape are a lot of these commercial landlords commercial owners in right now. And are they going to be able to survive if this carries on for another six months or another year. You know it's funny. When we we were on the show together a year ago talking about the beach market mar and we were talking about how retail was struggling that pandemic certainly not helping that. That is right. And the problem that we're going to be encountering is that you know for how long can landlords sustain zero debt service. Sorry zero cash flow coming from this retail space. The one positive note that could be coming out of this is that it could bring retail rents down significantly thus opening the door back for mom and pop and small small businesses to take our retail space as opposed to major national retail chains. But I think for certain that you know unless that happens you're going to be in a precarious position with respect to landlords carrying their debt. Service was going such a problem here in time with no cash flow coming from the retail space. This is always a question. I mean when we you know Manhattan for example has gone through periods of vacancies and even during good economic times. And one of the things that people point out is that well landlords don't want to offer rent concessions because the upside of getting someone to do a whole rent or maybe you're doing rate or maybe a bank is very high and so you hold out for that. Are there definitely going to be concessions in a meaningful sense ultimately or will landlords still try to eventually make the bet that at some point the tourists all come back and we get normalcy and that they don't want to lock in for years and years and some ISE submarket. Right. You know I'm see the whole spectrum of conventional wisdom would lead you to believe that concessions are inevitable and they have to be. I mean we're sitting here in midtown and I'm a couple blocks away from you guys and we're at 10 20 percent capacity of the workforce probably closer to 10. So how can concessions not be given. Now ironically enough in representing a number of landlords and tenants throughout this crisis you know I've seen all different reactions. A number of landlords is taking the position that you have a lease you can pay your rent. And if you don't pay your rent lease. And that's why we've seen a huge increase in vacancies in the retail and restaurant sectors in the last several months. And from my perspective it's mind boggling because what you risk being a restaurant meeting for example what do you restaurant owners come into New York City in the next 12 to 24 months to say hey let's start a restaurant in the middle of a pandemic and take on space and investment tens of thousands of dollars in building it out and creating restaurant. It's very highly unlike so. But believe it or not that is a position. Many new words are taken but most reasonable ones are working out with tenants in terms of premium plans concessions read advertising rents. And most interesting what I've seen is basing the current rent offer a percentage of gross receivables on the actually receipt for the next 12 months. It's good to hear that some landlords are trying to sort of work with their tenants in that way for those landlords payor that maybe are sticking a little bit more towards that contract. And the idea is that this is a contract set to it. I'm wondering above them when you talk about debt service has there been any sort of breaks given by the lenders the banks themselves on some of these commercial landlords where maybe that gives them the flexibility to work with work with their tenants. You know we're still in a period of forbearance. It's to be honest all the most of the commercial mortgages that are suffering or distress at the moment earn forbearance period where I believe they just extended Fannie Mae and Freddie Mac. I think Jeffrey just extended forbearance group to the end of March for lunch lunch date. So we we don't know how that will play out but eventually the banks will have to come to the table and probably. Structure a lot of the commercial difference out there in the marketplace. What is the biggest source of potential rethinking of the space itself. I mean sometimes you hear about office space maybe it gets turned into apartments or apartments getting turned into something commercial or restaurant but whatever it is. How much of that do you see your landlords fundamentally rethinking what they can do with their property. You know it's a lot of conversation at the moment. Nobody's actually taking the steps to do it because everybody's hopeful that in six months from now we have a vaccine and they want to see what kind of semblance of normalcy we have in the world. Are we going to go back to the way the world was twelve months ago. Many are skeptical. We'll go back fully to that. But it won't be as drastic of a measure of pay. Let's take all midtown Manhattan and speaking offices and turn them into my heart. I'm glad you're here. You're hearing everything. But you know most people are realizing they're going to have to read vision how they utilize their assets. Office space may turn one a shared office space coworking office space. Companies are obviously going to consider downsizing their real estate holdings and liabilities and that will have an impact. But the demand or the need I don't think it's going to go away. We're going to see an influx of commercial buildings being turned into apartments.

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It is 'Mind Boggling' That Landlords Don't Give Concessions: Pierre Debbas

Work-from-home has mostly passed the technology test, giving employers and staff new options. That’s a worry for businesses catering to the old infrastructure of office life, from commercial real estate to food and transportation. Pierre Debbas, managing partner at Romer Debbas, speaks with Bloomberg's Romaine Bostick and Joe Weisenthal on "What'd You Miss?" about how this trend is affecting real estate. (Source: Bloomberg)

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