Deals are still going through despite a global economic slowdown, but the coronavirus outbreak may affect real estate for years to come.

As the coronavirus pandemic continues to play out, the real estate industry is already considering what the long-term effects could be. With their short-term plans focusing on the health and safety of employees and tenants, forward-thinking developers and investors are looking at medium- and long-term horizons as well.

ULI Europe gathered experts for an online panel discussion titled “Confronting the Pandemic: Perspectives from Global Real Estate Leaders” on April 8. The recorded webinar can be viewed through ULI Knowledge Finder. This recording is open to all.

Though individual regions are starting to emerge from the pandemic, it still is not business as usual.

“Asia is not out of the woods at all, but China is coming back to work, and factories are gradually opening,” said Christina Gaw, managing principal and head of capital markets at GAW Capital Partners in Hong Kong. Wuhan was just starting to emerge from the lockdown that Chinese officials instituted in late January.

Webinar speakers noted that online purchases rose dramatically during the pandemic whereas in-person payments dropped. But payment processors in China were reporting that offline transactions had returned to about 70 percent of pre-pandemic levels, she said, a good sign for normalcy.

Some offices are empty while lockdowns remain in place, but many industrial sites continued to operate. Construction was shut down in some regions, but not all, noted Lars Huber, chief executive officer of Hines’s European region in London.

Nathalie Palladitcheff, president and chief executive officer at global real estate firm Ivanhoé Cambridge in Montreal, offered the view from Canada. As of early April, the country had been protected from an outbreak on the scale of that in the United States. But each province is issuing individual guidelines: shopping centers were still open in some parts of Canada.

“We’re trying to be a good citizen and help small businesses with liquidity problems, deferring some rents to provide some flexibility to local tenants,” she said.

Retail and gastronomy tenants are struggling in many areas, but grocery stores and convenience stores that were allowed to remain open were thriving. Huber noted that the coronavirus pandemic will likely have a big effect on the long-term viability of bricks-and-mortar retail.

Van J. Stults, founding partner at Orion Capital Managers in London, said he was seeing rent nonpayment rates of 70 to 80 percent for retail in the second quarter, while other sectors were seeing rates closer to 50 percent. His firm decided to deal with tenants on a case-by-case basis to determine which ones would have been in trouble even without the crisis.

Government bailout plans around the world have focused primarily on tenants, putting landlords in a sticky place between tenants and banks, participants noted.

Singapore is one of the many countries blocking evictions during the coronavirus pandemic, but Gaw said that across her company’s portfolio perhaps 20 percent of retail tenants were asking for deferrals.

“We’re working with banks to come up with better payment packages alongside tenants’ requests,” she said. “We have good credibility with the banks so we’re getting good support from them, especially for the Asia Pacific region.”

Stults said he had been surprised by the range of responses from banks. “Generally, on the continent—in Spain, Italy, and Germany—they’ve been supportive. But in the U.K., it’s a mixed response,” he said.

Huber estimated that about 80 percent of banks were not looking for new deals, but 20 percent of banks were. “The big question is when the second-quarter valuations come in,” he said. “It’s a moving target, and we’re just at the beginning of that conversation.”

Palladitcheff agreed that many questions remain, with big gaps between valuations in North America and Europe. Stults said he does not think valuations are the correct focus for operators or for lenders now.

“Managing through the pandemic is not about determining value,” Stults said. “Dealing with stakeholders is important. You manage the operations, and the value is an outcome.”

Gaw said that according to her conversations with investors, interest in good opportunities persists—especially in data centers—but everyone understands that the process will be slower than usual. She said she is not seeing any panic selling or distress in the Asian market.

Deals still going forward are likely to be advanced residential and logistics projects, Huber said. “We’re also seeing good-quality land deals going through, especially those with longer zoning and planning periods, where construction starts are maybe two years out,” he said.

Despite the global slowdown, “good deals are still getting done if they were in the pipeline,” Palladitcheff said. “Some deals make even more sense than they did, depending on the sector and geography.”

Density in offices, coworking spaces, hospitals, and transit will have to be reconsidered in a post-coronavirus world, panelists said. “Buildings might become obsolete more quickly if they don’t meet guidelines,” Stults predicted.

Though the experts estimated that the next three quarters will be critical for recovery, the coronavirus pandemic is likely to change how buildings and public spaces are designed for years to come.

Learn more about ULI Europe’s upcoming webinars here, and access recorded webinars on-demand at ULI Knowledge Finder.