Matt DeMonte, Chief Executive Officer of Revantage Corporate Services discussed “The Evolving Impact of Covid-19 on Commercial Real Estate and Shared Service Models.” A summary of Matt’s presentation and his bio are below.
Disruption brings opportunity and nothing has been more disruptive than COVID-19 which has challenged most industries and is forcing innovation into some otherwise tired sectors.
Data should always be anchored in fact and history is a great indicator of the future.
How COVID has (and will continue to) impact the below industries:
Real Estate (housing)
- Rise in AR/VR technology for real estate tours (alternatively, in-person, self-guided tours)
- Increase in millennials moving from cities to suburbs
- Consumers will be looking for more space with the rise in remote work
- Multi-family will recover but will need to consider multi-use areas (again, due to the increase in remote work)
Retail
- Grocery-anchored tenants will be best
- Strip malls should embrace urgent care centers
- General merchandisers (Walmart, Target, etc.) are doing well, especially those who offer contactless-delivery and pick-up
- Big box stores should be leveraged as last-mile distribution centers
- Retailers need a strong digital presence:
- 30% of consumers ordered groceries online for the first time during COVID
- Online orders are up 200%
Hospitality
- Hospitality valuation is down 20% and hotels will need to pivot to adjust to changing consumer needs:
- Hotels in proximity to hospitals are poised to do well
- Those with lots of corporate/entertaining space will need to adjust
- Ultimately hotels should consider offering apartment-style living
- Rents are down 47%
- 58% of NYC hotels are closed or mostly closed
- Illinois alone laid off 68K hospitality centric workers
- Revenue per available unit is down 40%
- Occupancy are as low as 30% (compared to normal)
- Daily rates are as low as 20% (compared to normal)
- Recovery not expected until 2024
Office Space
- Offices are expected to recover within 12-24 months but should address a hybrid-working model:
- Leverage physical office space for collaboration
- While valuations are only off 7%, demand is down 30%
- Vacancies are up 10-20% depending on locale
- Flex products (think: WeWork) are still viable offerings
General tech trends that have emerged with COVID:
- Contact tracing via facial recognition and/or Bluetooth
- Thermal scanning
- Occupancy tracking/thresholds
- Air filtration- portable units
- Oat-based products for sustainability
- Cloud-based data companies (like Snowflake Computing)
Other trends and thoughts
- Amazon is 1/3 of all warehouse space, 100 million in new sq feet this year alone
- E-commerce is up 60%
- Average employee earned 135% of their normal salary due to stimulus package
- 20% of employees earned 2x their normal salaries due to stimulus package
- Food production is struggling while stockpiling of supplies in cold storage has increased
With import and export down, warehouses near ports are less in demand
Matt DeMonte’s Bio
Matt DeMonte is the Chief Executive Officer of Revantage Corporate Services. Matt founded the company in 2017 to support Blackstone’s U.S. real estate portfolio companies with over $100b in Total Equity Value. Revantage provides those affiliated companies with shared services that include due diligence support, valuations and portfolio reporting support, accounting, tax, treasury, legal, risk management, people and culture, technology and innovation, and business transformation services. Prior to joining Revantage, Matt served as the nominated Chief Operations Officer and Global Head of Operations at State Street, Chief Operations Officer and Managing Director at RBC Capital Markets, Managing Director at Goldman Sachs, and Senior Manager at KPMG Consulting. Matt earned his Bachelor of Arts from Colgate University in 1999. He also studied at Harvard University in 1994, the University of London in 1997, and the University of the West Indies in Trinidad and Tobago in 1998.
