Mid-Month Musings

Commercial Tenancies

Our clients are doing better overall than they were at this same time last month, by three or four percentage points. On the type breakdown, industrial is starting to pull away from retail, as their ability to pay rent increases incrementally.










You might notice an unexpected connection between retail and industrial tenants. Namely locally based industrial tenants either manufacture or supply product to the retail stores. If retail stores are not open, then there is not enough demand from online or other purchasing sources to generate demand for the industrial sector of the marketplace. In our case it seems the PPP funds have not quite arrived for both industrial and retail tenants, making it difficult for them to pay their rent.

Our office buildings are still seeing the highest level of rent collections. Though, medical office numbers are driven down by the hold the state put on the ability of dentists and medical professionals to function (regarding face to face contacts). Now that the hold has been released, we expect to see rental income for those properties increase in June. These medical numbers are somewhat skewed by dental buildings that are owned by dentists who lease spaces in the buildings.

In the future, office tenants including businesses, government, and not for profit organizations will be making very important decisions regarding remote working in office environments. You should expect to see two major developments: 1) Renegotiation of current leases 2) The shrinkage of space office users will lease.

Three trends will drive these negotiations: 1) Social distancing requirements, 2) the desire for employees to work at home (to save commuting time and have more freedom) and 3) the acceptance of working from home (and implementation of chat and video communication) as a functional way of operating a successful business. This will most likely slow down the construction of new office buildings and may increase vacancy rates for existing office buildings.

To reopen, all businesses will need to make the appropriate modifications to maintain social distancing and employee health in order to open back up.

Residential Tenancies

Bluestone & Hockley Collections Report
  • 93.2% May Rent Collected so far
  • 91.4% Units paid so far

We are making good progress regarding our residential tenancies. Those tenants that cannot pay are either laid off, have not been called back to work, or have not received their unemployment benefits. Our very low-income tenants are the most challenged, with some of them behind two months in rent. Oregon and the Portland Metro areas have directed recapture of the rents for a time period after the expiration of the executive pandemic order plus 180 days. That is a long time away. Once a tenant is three months behind, we don’t expect them to be able to catch up, but Landlords are required to keep them in the units to give the tenants a chance to fulfill a payment plan.

Unemployment seems to have reached a peak for the time being unless the coronavirus cannot be controlled. Click here for the latest unemployment numbers.

The biggest challenge our clients are facing is how to handle the tenants that have not paid their rent. That 10% that have not paid their rent, are in desperate financial shape. This is most critical for our single-family homeowners who have one tenant paying the bills and may have had tenants not pay for over 2 months. It remains to be seen what help the federal and state governments will send their way. A $12 Million onetime fund has been established for these tenants. It is not clear who will benefit from these funds. They are targeted to the homeless population and to keep people from being homeless.

See this link (https://www.oregonlive.com/coronavirus/2020/05/oregon-releases-12-million-in-housing-funds-heres-what-its-for-and-how-you-can-benefit.html)

Oregon Courts

The Oregon courts system is slowly re-opening. Though there is a significant delay in Multnomah, Washington, Clackamas, Marion, and Polk Counties as contact tracers and procedures need to be set in place to meet the Governor’s mandated guidelines. See link here:


Once the courts are reopened, social distancing rules will apply, and the judges and the courthouse staff will structure proceedings and operations to stay safe. See link here:


Forcible Entry and Detainer (FED, Eviction) Proceedings are delayed until after July 1, 2020.

A Presiding Judge may schedule first appearances and trials to begin on or after July 1, 2020, but only if the following conditions are met: (1) Level 2 restrictions apply in the judicial district; (2) No applicable moratorium on evictions is in effect; (3) The court has sufficient staff to hold the appearance or trial; and (4) If held in the courthouse, social distancing can be maintained in the courtroom and throughout all court-controlled areas of the courthouse.

Once we have worked through all these delays, building owners will be able to take back control of their buildings from tenants who have been squatting, with no intention of paying their rent. This will include being able to evict tenants who are breaking rules and need to be removed for cause.


Oregon is turning a corner, but it will be months before the economy fully recovers.

Investors will look at their investments and make decisions regarding their future and the “virus resistibility” of these investments. That will drive future real estate demand. Financial institutions will also be looking carefully at their risk profile and will change their policies to protect themselves in the future, this may potentially include higher interest rates for new loans, as well as some form of six-month “security deposit “ in the form of mortgage payment reserves.

In the next three months, real estate sales volume will slow to a crawl as investors wait for buildings to lease up their vacancies. Our residential portfolio is showing signs of recovery and the acceptance of tenants to lease space, without having a leasing agent show it to them, “touchless leasing”. Commercial tenants are still trying to figure out how much space they will need in the future but are also getting used to “virtual showings”.

We are hopeful that the policies the government and the citizens are taking will keep all of us healthy and that the recovery will be quick.

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