Will SL Green Realty Feel the Impact of Remote Work?
SL Green Realty (NYSE: SLG), New York City's largest commercial landlord, has seen its stock price cut in half from its highs earlier this year. On its first-quarter earnings call, management optimistically noted that the company had collected 90% of its commercial real estate rents and 60% of its retail client rents. Given the relative weighting of its portfolio, this meant that SLG collected 86% of all rents through March. This number improved to 89% overall in April (including rents collected a month late), but declined to 85% in May.
Do these collection rates for real estate in New York City -- the U.S. city hit hardest so far by the pandemic -- suggest that COVID-19's expected longer-term impact on commercial real estate might be more muted? And if so, has SL Green's stock been hit too hard?
To answer those questions, we have to consider not just the short-term opportunities but also the longer-term risks of structural shifts in the market for commercial real estate. The most significant of these shifts, which is playing out in real time, is the transition to working from home.
Source Fool.com
