Welcome to the July 2020 Carolina Retail Experts Newsletter. To say this isn’t what we expected as we enter the second half of the year is quite the understatement. Where are we and what should we expect or prepare for as we go forward?
A quick recap of how we got here is a good place to start. Late January we heard of the Corona Virus. It likely originated in China but shouldn’t be a threat and the “risk is low”. By February the WHO has named it COVID-19, the first death in the US has occurred, Europe is on lockdown and it begins to feel like it’s not a low risk. March brings a National Emergency Declaration and measures to Flatten the Curve. Mass movement to working from home, closures of non-essential businesses. April business closures lead to historic unemployment, Government assistance programs, and cases top 1 Million worldwide. Late April and May bring phased reopening of businesses with different rules everywhere. Memorial Day brings crowds to beaches and backyards. June brings social justice protests, violence and vandalism. Large crowds and limited mask wear lead to a spike in cases.
As Retail Commercial Real Estate Experts, we want to see businesses OPEN and thriving! The people that operate these businesses are our friends, neighbors and clients. Retailing is hard, and restaurant retail is especially hard. This year has been especially difficult on retail with lockdowns and the phased reopening at a fraction of capacity then the riots and vandalism. Bankruptcies are on the rise and expect more stores to close before it is over. Now as cases rise many areas are rolling back openings to previous phases. Hospitals are reaching capacity and more infections are expected.
There is good news among all this craziness. Landlords and Tenants are still doing deals! We have seen a flight to quality real estate. Retailers are targeting space where ‘at risk’ and bankrupt retailers are located. The Drive Thru is even more valuable than it has ever been. While we have not seen a wholesale compression of rental rates we have seen a pullback from historic highs. The urban areas where rents have as much as tripled over the last several years are experiencing the most pressure. Suburban markets where supply is low anyway haven’t seen as much pressure due to the scarcity of great retail space. Many predicted shopping centers would be bought at bargain prices, but that has not come true – not yet anyway. During the last few months we have seen retail pivot and adapt to persevere and expect to see this continue.
Going forward. What is next is requiring that we wear masks, physical distance and take on personal accountability. This is simply science, not a political statement, or some infringement on personal liberty. Many local municipalities have imposed orders and expect almost everywhere else will over the next few weeks. If you don’t wear a mask to keep you safe, please wear one to keep me safe. Wear it to advance the safe reopening of your favorite stores and restaurants and to keep those workers safe. Look UP, Look Forward and Stay Safe!