THE TRUE IMPACT OF COVID-19 on communities across the globe likely won’t be known for some time. With the benefit of hindsight, historians, economists and social scientists will frame the narrative in the years to come. Regardless, the pandemic and resulting economic shutdown have brought significant changes in the way Realtors® and their clients live, work and play. And this has implications not only for residential real estate, but for commercial properties as well.
"Similar to 100 years ago, today’s 'new normal' may again result from the accelerated implementation of technologies that have been around for many years."
One way to gain perspective on the virus’s effects on commercial real estate is to look at the Spanish Flu epidemic that began in 1918 and continued through the spring of 1919. In the United States, at least 675,000 people died.
Striking in the middle of World War I, it was especially lethal among the young, otherwise healthy, soldiers. Among the 116,516 soldiers who died during the war, more than half, 63,114, died from the flu while 53,402 died in combat.
Local resident Charlotte Corner later remembered, “On top [of the war deaths] we had that awful outbreak of flu … and there were not enough doctors, there were not enough nurses,” as related in the bicentennial History of Fairfax County, published by the Board of Supervisors in 1978. Fairfax County’s schools and churches were closed, the county fair and other community gatherings were cancelled, and the public was asked to wear masks and stay away from one another. Still, Fairfax County was one of the hardest hit jurisdictions in Virginia with 531 fatalities.
As the war ended, Northern Virginia remained very rural. Its total population amounted to less than 100,000 with roughly 22,000 residents in Fairfax County – nearly the same as Fauquier County. An additional 16,040 resided in Arlington and Alexandria combined.
The loss of life from the flu, combined with the changes brought about by the war, had a profound effect on Northern Virginia, accelerating the implementation of numerous new technologies that had been in existence for some time, but not widely adopted in the region.
Sanitation and public health became a priority. Fairfax County established a new public health program in 1919, and the first inspection revealed that only 5% of the 2,007 homes inspected had sanitary toilets. Only 75 of the more than 2,000 farms had running water while only 145 had electricity, which would make lighting and home food refrigeration available.
An even greater impact on sanitation would result from the spreading popularity of the automobile. Automobiles allowed more Virginians to move farther into the pristine countryside and away from the congested and unsanitary city. Still commuting to the city to work, they created a new type of resident: the “commuter.” By 1923, the purchase price of the popular Model T Ford dropped to $300, and 2,775 vehicles of all kinds were registered in the county.
Farmland became increasingly valuable as investors developed it into suburban housing. For the first time beginning in 1925, farmers accounted for slightly less than half of the residents of Fairfax County.
Responding to the new challenges, in 1921, real estate agents created the Alexandria-Arlington-Fairfax Real Estate Board – which became the Northern Virginia Association of Realtors® (NVAR) – to improve the “professional” and “ethical” standards of the industry. In 1916, the term “REALTOR” was devised by Charles N. Chadbourn, a past president of the Minneapolis Real Estate Board. The collective membership marks REALTORS® and REALTOR® were trademarked in 1949 and 1950, and the title “REALTOR®” became a badge of honor.
New zoning laws adopted in the 1920s created standards for single- family residences to be built on their own private lots, separated from commercial property. Homeowners would now rely on their cars not only to commute to work, but also to do their shopping and take care of their daily activities.
Similar to 100 years ago, today’s “new normal” may again result from the accelerated implementation of technologies that have been around for many years. Our new reliance on e-commerce, working from home, distance learning, and even telemedicine may change how and where families choose to live and work. Responses in Northern Virginia, however, will be vastly more complicated with the current population, which has grown to more than three million. With renewed emphasis on sanitation, employers and shopkeepers may again seek to move out of the city. Large offices and retail centers with expensive amenities like parking, employee fitness centers and cafeterias, could become a thing of the past.
Potential liability for the health and safety of occupants and visitors might also impact commercial choices.
Single-family residential zoning laws could be reconsidered. The current distinctions between residential and commercial zoning may no longer be appealing. Home offices could evolve into home-based small-scale manufacturing, or services like hair salons or exercise facilities. Families may prefer to have secondary housing available on their property, so grandparents can live with their families. Carriage houses may reappear providing low-cost housing for caregivers.
Commercial real estate has long been based on quantifiable figures – numbers of employees, volume of sales, quantity of products, etc. – defining the amount of square feet needed for each enterprise.
With the millions of jobs that have been lost, the increasing number of bankruptcies, and employees working remotely, commercial property owners and tenants will be looking to dispose of their unused space to reduce their costs.
The resulting increased vacancy rates will result in lowering the cost to buy or lease commercial property, and lead to alternative uses for existing spaces, whether it’s converting retailing to “last mile” warehousing or retrofitting unused office space into apartments.
The possibilities stretch the imagination, affecting nearly all types of commercial property whether it is offices, shopping and distribution centers, or restaurants.
As NVAR enters its second century, Realtors® will see even bigger challenges, change and possibilities.
Realtors® are already adopting creative new ways for staying connected while respecting the needs for increased sanitation and security for themselves, their clients and the public. Those with the motivation and imagination to learn, coupled with a dedication to serve their communities in new ways, will create new opportunities.
Frank Dillow is a past chair of NVAR’s Realtor® Commercial Council, an NVAR instructor, and a senior commercial broker in Long & Foster‘s Commercial Division. He can be reached at francis.dillow@ longandfoster.com.