Back in May, the Centers for Disease Control's (CDC) announcement that the fully vaccinated could go mask-free in public indoor settings signaled a turning point in the pandemic. Vaccinations were up, cases were down, and it was starting to look like things could finally get back to some kind of normal.
But then the delta variant emerged, and its highly transmissible nature has caused a resurgence in COVID-19 cases across the country. Not shockingly, the CDC announced on July 27 that it's reversing course on its May guidance, and it's recommending the fully vaccinated should now, in fact, prepare to mask up when going out in public in areas of the country with high or substantial transmission rates.
At this point, most of the U.S. falls into that category. In fact, some cities, like Los Angeles, have already reimposed a mask mandate. And as the delta variant continues to spread, more cities may follow in its lead.
The impact on real estate
The CDC's decision makes sense in light of the trajectory the pandemic has taken in recent weeks. But it could also deal a harsh blow to real estate investors.
Now that the CDC is recommending mask usage, consumers may take it as a sign that it's no longer safe to shop in public. That could, in turn, hurt retailers, many of which have already seen their revenue decline in the course of the pandemic.
This new guidance could also make some people fearful of traveling again. And at a time when hotels were finally starting to enjoy an uptick in bookings, that's not a good thing.
That said, these new mask guidelines could give short-term rental owners a major edge in the near term. Many people don't want to mask up while on vacation, so some travelers may opt to rent private homes rather than stay at hotels and have to carry a mask with them.
Office REITs (real estate investment trusts) could also get hurt by the recent change in guidance. At this point, many companies are planning to bring workers back to the office starting in September. But the idea of having to work in a mask for a full day may not sit well with employees, meaning companies could encounter pushback -- and delay their reopening plans as a result. That would be brutal for office buildings, which, in some markets, have seen record-high vacancy rates since the pandemic began.
Now this isn't to say that the CDC's new guidance isn't spot-on or necessary. Back when it announced that the fully vaccinated could go maskless, the delta variant only represented 1% of reported infections in the U.S. Now, it represents at least 83% of cases.
But still, this recent change could have a devastating effect on real estate investors. And if cities start to impose added restrictions in an effort to curb the spread of the outbreak, that, too, could hurt investors across a wide range of sectors.
The CDC has said that it may once again give the vaccinated the green light to ditch their masks if transmission rates decline and inoculation rates improve. But whether both things happen soon is yet to be determined.