Coronavirus vaccines have been rolling out at a decent pace for months, and a large percentage of U.S. adults have already begun the process of inoculation. Helping that effort along was the Johnson & Johnson (NYSE: JNJ) vaccine. Unlike the other vaccine candidates on the market, Johnson & Johnson's formula had the advantage of being a one-dose shot. This made it more accessible to the public and made the process of becoming fully vaccinated less complicated and cumbersome.
But now, the CDC and FDA are hitting pause on the Johnson & Johnson vaccine due to safety concerns. And if that holdup drags on, it has the potential to impact real estate investors.
The Johnson & Johnson vaccine is being pulled temporarily due to reports that it has the potential to cause a rare and severe type of blood clot. So far, the U.S. has reported six cases of such a clot among 6.8 million doses that have already been administered. All of the cases occurred in women between the ages of 18 and 48, and symptoms began six to 13 days post-vaccination.
At this point, health agencies need to hit pause on the Johnson & Johnson vaccine to assess the situation and determine whether the risks associated with taking it outweigh the reward. Now to be clear, this doesn't mean the Johnson & Johnson vaccine will be taken off the market. It just means that the CDC and FDA need to dig deeper into the blood clot issue and understand how to move forward.
A blow to real estate investors?
Expedited vaccinations on a massive scale could benefit real estate investors in a number of ways. First, the sooner more people get vaccinated, the sooner they may feel comfortable traveling. The result? More revenue for hotels, which are coming off a miserable 2020.
Furthermore, a faster vaccine rollout means more companies can make plans to bring their workers back to the office. Given the record number of vacancies that have been battering office REITs (real estate investment trusts), getting people back to in-person work is crucial.
Finally, the more people who are fully vaccinated, the more people are apt to feel comfortable entering malls to shop at physical retailers -- a trend that could prevent another wave of store closures. And at this point, mall REITs can't afford to see more retailers shutter.
But if hitting pause on the Johnson & Johnson vaccine causes a slowdown on the road to widespread inoculation, all of these important points of progress will be halted. Hotel bookings may not pick up as quickly, offices could sit vacant for several more months, and malls could remain sluggish. As such, this isn't the best bit of news for real estate investors.
That said, investors also shouldn't lose hope. Just because Johnson & Johnson doses are temporarily being paused doesn't mean the country's vaccine efforts are doomed. In fact, the White House has already issued a statement confirming that pausing the Johnson & Johnson vaccine should not have a significant impact on the goal of administering 200 million shots by the end of April.
It's also worth noting that as the vaccine rolls out to the general public, the incidence of rare but dangerous side effects may increase. But six blood clots out of nearly 7 million doses is not necessarily cause for major concern, especially if health agencies are able to identify a pattern that could mitigate that risk for future vaccine recipients. As such, the takeaway from today's news is that while it's not what real estate investors want to hear, it's also not a reason to panic.