Right now, many of you are feeling the effects of COVID-19 as we emerge from quarantine. There is no question that the virus will be felt for many months and maybe even years ahead. A number of brands have filed for Chapter 11 bankruptcy (or may do so in the near future), including Neiman Marcus, JCPenny, J.Crew, Forever21, Gold’s Gym, Steak-n-Shake, JoAnn Fabrics and many others. The stores and restaurants left in the wake of COVID are facing widespread changes to their business models, such as limited operational capacity. All the while, consumers are reluctant to venture out amid concerns the virus is still lingering.
So, where does that leave us and where do we look for hope in the retail real estate sector?
Look no further than the foundation of our communities – your local hair salon, your dentist, donut shop, dry cleaners, and other neighborhood retail.
These local community shopping centers have always been the backbone of our communities and provide essential daily needs and services. Neighborhood retail consists mostly of hard-working, entrepreneurial mom-and-pop type establishments, while a number are regional operators or franchisees of larger national brands. They are essential to our lifestyle. It’s where you stop to buy flowers for your wife, get a quick haircut, treat the kids to a cup of yogurt, visit the dentist or take your dog in for their annual exam at your vet. In many cases, we know the owners of these establishments and we have a personal connection to them. We often see the money spent there not as discretionary, but part of our daily/weekly routines.
You may not believe it, but neighborhood retail is the best equipped to handle social distancing compared to other sectors of retail. Just take a second to think about it. Many of these stores are “in and out” and the amount of time spent inside is limited. Many have drive-thru options and many are not jam packed with customers inside at any given time.
Daily needs and services have always been a vital part of the retail real estate section but in recent years have been often overlooked in favor of newer trends or other concepts that grab bigger headlines. But neighborhood retail has always been there supporting our communities and embodies everyday essential needs.
Maybe one of the lessons we can learn from this whole pandemic is to get back to basics. As we move past COVID, neighborhood retail properties will become an even more desirable asset for retail investors and developers. Owners and brokers that understand the nuances of these types of properties are poised to be in a good position moving forward.
Please feel free to reach out if you have any thoughts you’d like to discuss.
Stay safe and take care.
