Businesses set to emerge from lockdown; some will find new ways to adapt
It’s hard to imagine any economic sector left untouched by the COVID-19 pandemic and lockdown. Waves are still rippling through most markets across the country, if not the world, and will be for some time.
Commercial real estate is no exception. But the effects have been mixed: It’s certainly not all gloom and doom. While the slowdown of economic activity and human interaction has caused hardship in many areas, it has opened up opportunities in others.
Retail commercial real estate is one of my specialties, particularly leasing. In my market here in Sarasota/Bradenton, things aren’t substantially different from the way they were at this time last year. That may come as a surprise to many.
Not that things have been easy. For example, restaurants have struggled amid all the restrictions. The first half of the year has been difficult in that industry. But even in this, many restaurateurs have managed to hang on. Several of my restaurant tenants haven’t opened for the lunch crowd yet but they are actually getting capacity crowds for dinner, which is encouraging. And while some restaurants have closed shop permanently, others will be there to move into their facilities — new construction of these buildings has been sufficiently low to prevent any sizable surplus. Greater supply may turn out to be one of the opportunities this crisis has created.
Retail stores are another sector going through tough times. While maybe retail outlets were already swimming against currents caused by online shopping trends, the lockdown has done two things to further impair the market: It has restricted people from physically entering the stores and has further acclimated people toward internet shopping. (A possible upside here is the building of more distribution centers to fulfill all the online orders.)
One retail market that may experience less long-term trouble is the personal services industry. Whatever happens in our society, people still need their haircuts. In the future, they will continue frequenting spas, beauty salons, nail salons. There are no online alternatives to these services, obviously — no virtual haircuts or facials. These establishments have taken a significant hit with all the lockdown restrictions, but there will still be demand for their services as things begin to open up increasingly.
Even as these in-demand services return to normal, however, things will be different. Frequently touched areas will require regular sanitizing. Transparent shields will become fixtures in many establishments to lessen viral transmission through the air. Many establishments will have to provide curbside pickup, even if they’ve never done so before. In addition, restaurants and movie theaters are likely to see reduced capacity to comply with social distancing standards.
Other retail stores that sell items not readily available online, salvage stores, for example, are likely to continue fairly unimpeded after this crisis is over.
One thing to remember is that business owners tend to be resourceful and resilient. Many have a knack for devising new strategies to thrive in difficult situations. Others will find ways to capitalize on the current situation.
Time will tell how people will adapt. But they will.