Speaker 1: This is Bloomberg Business Week with Carol Masser from Bloomberg Radio.
Speaker 1: So we're gonna slow it down a little bit, UM
Speaker 1: and take you to a story that's in the current
Speaker 1: issue of Bloomberg Business Week magazine. It's a disturbing story.
Speaker 1: It's a very illustrative story of what's going on around
Speaker 1: the country because of the pandemic, where for many options
Speaker 1: are pivoting and runways are coming to an end. So
Speaker 1: let's get into it with Bloomberg News finance reporter no
Speaker 1: bu Hire who joins us from Seattle along with Liz Dunn.
Speaker 1: She is the founder of Doune in Hobbes and she's
Speaker 1: the subject of Noah's story, and she joins us on
Speaker 1: the phone from Seattle as well. Thank you so much
Speaker 1: both for being here. Noah, I want to kick it
Speaker 1: off with you. Tell me what you set out to
Speaker 1: do in your reporting and how you were led to
Speaker 1: Liz and why her story just resonated with you. Yeah,
Speaker 1: thanks Carol, So listen. I actually started chatting several months ago, UM.
Speaker 1: I think it was in April or May of last year, UM,
Speaker 1: for a project that I'm doing for Business Week, UM,
Speaker 1: following small businesses in one neighborhood here in Seattle through
Speaker 1: the COVID crisis and um over the months. Uh In
Speaker 1: in several conversations with Liz, I was just struck by
Speaker 1: all of the sort of financial um and business bonds
Speaker 1: that she had created and um developing this really uh
Speaker 1: several properties on this really cool block in Seattle. Just
Speaker 1: how how COVID was was really putting a lot of
Speaker 1: those relationships under strain. And what I wanted to do
Speaker 1: was tell a story about real estate and small business
Speaker 1: and all of these links between people and how they
Speaker 1: got through the first ten months of the pandemic and
Speaker 1: what it might take to get them through the next time.
Speaker 1: So Liz, come on in on this. First of all,
Speaker 1: how's your year been, Oh, Carol Um, It's it's been
Speaker 1: pretty challenging. I've been doing small scale real estate for
Speaker 1: about twenty years, and I've survived through a couple of
Speaker 1: previous crises for nine eleven, and then you know the
Speaker 1: economic meldown that started in two thousand and eight. But boy,
Speaker 1: this just takes the cake for sure. Well, And to
Speaker 1: be fair, and what's interesting, and it's one of the
Speaker 1: things we've talked about a lot less is you know,
Speaker 1: companies big and small had to learn to pivot. Like
Speaker 1: I feel like I've used that word a million times
Speaker 1: over the past twelve months. You did as well, and
Speaker 1: you had some things going for you in terms of,
Speaker 1: you know, where your real estate was located, what kind
Speaker 1: of tenants you had. Tell us a little bit about that. Well,
Speaker 1: I kind of operate at a scale that UM really
Speaker 1: caters to locally owned small business and so I love
Speaker 1: to renovate old buildings and then cream a bunch of
Speaker 1: smaller users UM kind of into one project where UM
Speaker 1: it can create a real critical mass um of of
Speaker 1: UM you know, interested in terms of retail and restaurants
Speaker 1: for the for the customers. And we're in a really
Speaker 1: great neighborhood called Capitol Hill. It's kind of the you know,
Speaker 1: the cool, funky alternative neighborhood in Seattle and and UM.
Speaker 1: But you know, the problem is that these small family
Speaker 1: owned businesses are UM super vulnerable. And as Noah and
Speaker 1: I discussed of my twenty some customer facing businesses on
Speaker 1: this one block, you know, they were all impacted in
Speaker 1: various ways by by shutdowns, UM or other aspects of
Speaker 1: the pandemic. So no as you were doing your reporting
Speaker 1: and talking with Liz and and unfolding this story. What
Speaker 1: struck you, well, a couple of things. One is just
Speaker 1: how um, how much the businesses their tenants at list
Speaker 1: property were able to pivot and just sort of do
Speaker 1: what they could to keep revenue in the door. Another
Speaker 1: thing was just Liz's willingness to do whatever she could
Speaker 1: to keep them floats. So what that meant a lot
Speaker 1: last year was Liz had to go out and negotiate
Speaker 1: with with her banks, the folks who have mortgages on
Speaker 1: her property, and get some sort of relief there so
Speaker 1: she could turn around and pass um basically give her
Speaker 1: tenants some wiggle room um and And I think that's
Speaker 1: like a hugely important and underappreciated aspect of what's been
Speaker 1: going on here. And you know, from the outside of
Speaker 1: this crisis, uh, you know, I spoke with one of
Speaker 1: Liz's lenders, um, the CEO of Home Street Bank, which
Speaker 1: is a regional bank here in Seattle, and that they're
Speaker 1: willingness to work with Liz over the last couple of
Speaker 1: months has just been huge. But I think Liz and
Speaker 1: home Street also thought that this pandemic would be over
Speaker 1: by now. A lot of us did, and so really
Speaker 1: the point we're at in this crisis now everyone's having
Speaker 1: to come back to the table now and figure out
Speaker 1: what makes sense for the next several months. What's interesting too,
Speaker 1: And there's a stat Noah that jumped out at me
Speaker 1: about the strain that we're seeing in terms of you know,
Speaker 1: us retail landlords. We've talked a lot about this on air,
Speaker 1: counting more than fifty billion dollars in miss rent payments
Speaker 1: last year according to estimates from co star um and
Speaker 1: some of those maybe will never get paid. But we've
Speaker 1: been watching so closely, Noah, the real estate market for
Speaker 1: looking for signs of strain. And it's big players, smaller players,
Speaker 1: but we've been watching it very closely, especially as we
Speaker 1: increasingly see in our communities. We see in New York
Speaker 1: City a lot of retail restaurants they're not there anymore
Speaker 1: and they're just boarded up and they're empty places. Yeah,
Speaker 1: I mean, I think what's interesting about Lizzar's property, UM
Speaker 1: properties is the resilience. I mean, there's been a lot
Speaker 1: of work that has gone in to keep those businesses
Speaker 1: afloat and um. You know, another thing that should be
Speaker 1: noted is that the block where these properties are was
Speaker 1: was just really steps from where a lot of the
Speaker 1: racial justice protests were um in Seattle, And um, there
Speaker 1: were periods over the last year where um, these businesses
Speaker 1: had to board up. But um, you know, I think
Speaker 1: Liz worked with her tenants. She could say more about this,
Speaker 1: I'm sure to just sort of make make it clear
Speaker 1: that you know, they were open and functioning to the
Speaker 1: best of their ability. So was how crazy was it?
Speaker 1: Because it sounds like there were a lot of things
Speaker 1: that made survival possible. It was government programs, it was
Speaker 1: bank forbearance. Um, there's a lot of things. I mean,
Speaker 1: just what was it like, you know, in terms of
Speaker 1: finding the pieces to kind of keep it going? Well,
Speaker 1: I think you're right. It was a jigsaw puzzle and
Speaker 1: it continues to be a jigsaw puzzle. And you know,
Speaker 1: that's why I really appreciate Noah telling this story because
Speaker 1: I think the plight of the mom and pop landlord. UM,
Speaker 1: I think that story is not really getting told as
Speaker 1: much as it should. But um, yeah, our our tenants,
Speaker 1: we helped all of our tenants connect with banks if
Speaker 1: they didn't have one, so they could apply for the
Speaker 1: p PP resources we are once again with this round,
Speaker 1: coaching them and and connecting them. UM, if they don't
Speaker 1: have those relationships. UM. The protest zone was half a
Speaker 1: block from us in that made the months of June
Speaker 1: and July UM really difficult. And even today there was
Speaker 1: a swarm of bicycle cop that just um uh road
Speaker 1: around our block because our area has kind of become
Speaker 1: a flashpoint for UM protests on various issues, and so
Speaker 1: that that kind of continues. But you know, I'm so
Speaker 1: lucky to have relationships with local banks. And that was
Speaker 1: intentional after the last down turn, when I realized that
Speaker 1: these big national banks, uh, you know, they're they're they're
Speaker 1: paying no attention to the plight of one little landlord
Speaker 1: in Seattle. UM. Now I only deal with local banks
Speaker 1: where I literally, if I needed to, could walk into
Speaker 1: the office. You know, that is such an important story.
Speaker 1: It's something actually my husband I were talking about the
Speaker 1: importance of like local community banks. UM. Nowhere we've talked
Speaker 1: about this, you know, the big banks, there's been a
Speaker 1: lot of pressure even since, of course the financial crisis,
Speaker 1: to you know, work within the smaller business community. UM.
Speaker 1: Think about kind of neighborhoods, and there's been a lot
Speaker 1: of pressure on them, but we've realized how important it
Speaker 1: is these local community banks in terms of the relationships
Speaker 1: and understanding their communities and the needs of them. Yeah,
Speaker 1: I think I think that's a good point and something
Speaker 1: that's very salient and and Liz's story is I mean,
Speaker 1: really what we're talking about is the difference between what
Speaker 1: what kind of what the city, what any city really
Speaker 1: looks like. Um, after we're through this pandemic, it's, as
Speaker 1: Liz said, at it's been a jigsaw puzzle and putting
Speaker 1: together all the pieces in a way that the world
Speaker 1: resembles something like what it was before the pandemic just
Speaker 1: requires a lot of action from a lot of different people.
Speaker 1: And um, you know, community bankers tend to have their
Speaker 1: finger on the pulse of what's going on in their backyard.
Speaker 1: And you know, uh, the loans that Liz has they
Speaker 1: probably you know, would be a complete rounding air for
Speaker 1: a large national bank, but they're not trivial for for
Speaker 1: a smaller bank. So, um, I just my reporting, you know,
Speaker 1: what I gathered was there was a lot more willingness
Speaker 1: to sort of look at the totality of the situation
Speaker 1: and try and imagine a way to get through this together.
Speaker 1: Were you you know and know you mentioned talking to
Speaker 1: Mark Mason the city of Home Street. Are they you
Speaker 1: know here it is a local UM smaller bank, right
Speaker 1: financial institution. Are they feeling increased singly the strains the
Speaker 1: longer this goes on. I'm assuming yes, but I'm just
Speaker 1: curious what you might have heard. Uh. What's interesting about
Speaker 1: Mark is that he helped turn around Home Street after
Speaker 1: the last um uh recession. He came in I want
Speaker 1: to say, um, maybe twenty nine, two thousand nine and
Speaker 1: another tough time. Yeah. What what he explained to me
Speaker 1: is that this this uh, this moment is fundamentally different,
Speaker 1: and and he sort of generally thinks that um, real
Speaker 1: estate values are going to hold up and uh that
Speaker 1: you know, he has some wiggle room um to to
Speaker 1: work with borrowers and and try to get to the
Speaker 1: other side. Now, obviously that's not going to be true
Speaker 1: for for all real estate. There are segments of the
Speaker 1: market that have really been impacted. It might take quite
Speaker 1: some time to get back, UM. But I think it's
Speaker 1: an important difference that people should have in mind as
Speaker 1: they book and try and think through what's going to
Speaker 1: happen in the commercial real estate market in the US
Speaker 1: that that bankers are looking at um their loan books
Speaker 1: differently now than they were a decade or so ago. Liz, Um,
Speaker 1: from what you know, the headline of the story, my
Speaker 1: runway is over. Um, how much more runway do you have?
Speaker 1: Depending since we don't know quite how much longer this
Speaker 1: pandemic will go on. Just got about thirty seconds here. Well,
Speaker 1: I mean, I think there's this liberal hope in this
Speaker 1: story as we've seen, but um, just because I'm lucky
Speaker 1: to have these local relationships. But I am going to
Speaker 1: need more help. You know. The pandemic is right now
Speaker 1: as bad as it's ever been. And um, and so
Speaker 1: it feels like it's going to take years. Like I'm
Speaker 1: now being realistic, it will be bad this year, but
Speaker 1: even two will be a recovery year. So um, We're
Speaker 1: hanging in there, but we're going to need more help. Well,
Speaker 1: good luck and great reporting. No about you know Bohire,
Speaker 1: He's finance reporter at Bloomberg News, has done founder of
Speaker 1: done In Hobbs. Find that story in the current issue
Speaker 1: of Bloomberg Business Week magazine, also at Bloomberg Dot. Comment
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