College Columns December 2021 - Page 31

Consultant ’ s Corner continued from page 13
have rebounded and are now above prepandemic levels . Everybody gets it now and recognizes that creativity and plenty of capital and patience are required to reposition and realize value from the malls which have played such vital economic and cultural roles in our communities .
Movie Theatres : The jury ’ s still out ( even for those saved by a meme )
When exhibitors faced an existential threat , they did what they needed to do with landlords and lenders . Recognizing that their collective futures depended on finding a solution — even if temporary--landlords provided massive rent deferrals and lenders forbeared . Even though “ tentpole ” movies are now back in theatres and Oscar buzz abounds , attendance is still well below 2019 levels , albeit increasing . Audiences have gotten used to the convenience , comfort and affordability of streaming movies at home . Now concerns about the Omicron COVID-19 variant will further slow the return of movie goers to theatres .
Hospitality – Stark differences in recovery by market segment
Recovery in the hospitality sector varies tremendously by property and market segmentation with those catering to the group meeting segment and business traveler in non-resort destinations still struggling . Industry participants point to 2024 as the year that properties will stabilize but this masks extremely stark differences in how individual properties are faring . It ’ s the one property type for which I continue to provide guidance and expert testimony , usually in the context of single asset real estate cases . Co-working – The pandemic as silver lining COVID-19 also dealt a near fatal blow to coworking and flexible office space providers forcing several Chapter 11 filings , the most
notable and high profile of which included certain affiliates of IWG Plc operating as Regus in the U . S . The immediate effect of the pandemic was devastating as coworking / flexible office space users stayed away in droves and stopped paying licensing and user fees to their flexible office space provider .
But oddly , the pandemic might have been the best thing to have happened to this industry . It cast a spotlight on a fundamental weakness -- the huge risk of short- term assets ( user contracts ) mismatched with long-term lease liabilities . Exposed to the very real risk of this model , companies increasingly pivoted to one more like the hospitality industry , adopting an “ assetlight ,” management approach .
Co-working also offers users a real alternative to traditional long-term leases in urban centers , something many might not have seriously considered pre-COVID . The flexible office space model is just that : companies commit for shorter periods and use a fraction of the capital otherwise needed . Co-working affords users a way to provide workspace for their employees in a manner which is consistent with the hybrid model many are adopting . So , what exactly did I learn ? With the seeming prospect of free money forever , we ’ re all wondering about the future . Massive amounts of capital flooded the market before 2020 and the situation only has intensified . Although federal stimulus dollars and monetary policy have shielded many individuals , organizations and businesses from COVID ’ s worst ravages , governments ’ largesse has , in many situations , supported and sustained weak and inefficient enterprises . I still believe the day of reckoning is inevitable , albeit impossible ( at least for me ) to predict .
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