How is CRE Shaping up for the Remainder of 2020?

How is CRE Shaping Up for the Remainder of 2020?

The fractional opening of businesses across the United States can be hard to keep up with, and while uncertainty is highly prevalent in all sectors of real estate, retail real estate is seeing movement again. At some point the worst of the pandemic will subside, and when it does the commercial real estate world is forever changed and will operate quite differently.

In this article we give our outlook on the remainder of 2020 and beyond, looking at specifics within the industry and what affect COVID-19 will have on various sectors within retail industry, vacancy rates, property values, and more

Industry-Specific Trends and Predictions

Restaurants
Grocery
Hospitality
Curated Experiences Increase
Parking Changes
Tenants of the Future

2020 Recovery & Beyond

Vacancy and Values
Access to Capital
Lease Terms
The Bottom Line

RESTAURANTS

The current social distancing policies will not work for the traditional business model. We predict patios will become a larger part of the NOI equation and will be an absolute premium – even necessity for some brands. We also believe that there will be a new interest in drive-thrus and walk-up windows for top brands that traditionally were not a candidate for these add-ons. This will further increase the cost structure and demands in technology as brands readjust their business model.

GROCERY

The grocery war of a few years ago has changed again. There were multiple specialty grocery chains – Second Stop Grocers, those requiring a second stop at another retailer for products not offered – expanding rapidly and many never reached a profitable equilibrium, as shown by the fall out of retailers like Lucky’s, Fresh Market, and Earth Fare. The Full Line grocers have the best chance to regain market share as they have quickly moved to pick-up and delivery, as well as a full complement of offerings inviting the consumer back to their stores.