Commercial real estate will recover after the lifting of restrictions on the spread of coronavirus



(The real deal)

Unfried halibut attracted a small crowd in the Blue Mar recently Thursday afternoon.

One by one, guests on the outdoor patio of a posh seafood restaurant in Southampton removed the face masks they had worn for most of the year and tossed them into a fire pit, which they then doused with fuel and set on fire to the tune of Vagabond’s “Disco Inferno”.

Meeting – called a few days after the CDC. issued new guidelines which said that vaccinated people can do without masks – it was not so much a protest as a holiday.

“The message was clear: everyone must get vaccinated,” said Zak Erdem, owner of Blu Mar, who briefly had a liquor license. pulled last summer, among other things, due to alleged violations of the state mask mandate.

With over 138 million Americans fully vaccinated as of early June, Covid restrictions are quickly being lifted across the country.

In New York, indoor and outdoor productivity restrictions for most businesses, as well as mask requirements for vaccinated people, were lifted on May 19. In California on June 15th, factories will be exempted from productivity restrictions. And while much of Florida has been open for business for several months now, Governor Ron DeSantis suspended all remaining restrictions on May 3, two weeks before the updated CDC leadership.

While these orders give business operators considerable leeway about how strict or lenient they want to be – in some cases the level of ambiguity has reached the point of confusion – retailers, hoteliers, restaurateurs and office landlords are generally bullish about the return. However, serious obstacles remain, including an acute staff shortage, sobering views on tourism and an unpredictable office market.

Mavis Benson said she saw an immediate influx of visitors to her Avalon Gallery in Delray Beach, Florida following a change in CDC guidelines.

“It was almost like someone flipping a switch,” she said.

Musso and Frank from Hollywood during a pandemic (Getty Images)

The classic Hollywood diner Musso and Frank has been closed for more than a year during the pandemic. It reopened for dinner on May 6, when Los Angeles County allowed restaurants to increase capacity by up to 50 percent.

It is now gearing up to go full capacity on June 15, and will not be required to have a mask or ask visitors for proof that they have been vaccinated.

To mask or not to mask?

Equinox’s mask requirements symbolize changing circumstances from state to state. In California, luxury fitness club chains always require masks, and in New York, those vaccinated can opt out of masks. In Florida, anyone can train without a mask.

It is one of many retailers across the country deciding how best to respond to a new store opening. According to Rachel Kolokotronis of the consulting firm Elliot Group, the verdicts that companies come to can have serious consequences.

“If this restaurant decides that they want to be a little stricter on their mask rules, they risk being mistreated by guests,” Kolokotronis said. “If they want to be more casual about their rules, they run the risk that guests won’t feel comfortable enough to dine there.”

Three South Florida businesses interviewed by The Real Deal said employees should wear masks, but not patrons. Despite this, most clients choose not to remove their masks.

“I think wearing masks is likely to become a part of our society in our future,” said Stephen Bittel, chairman of Terranova, which owns retail and restaurant on Lincoln Road in Miami Beach and Miracle Miracle in Coral. Gables. “People will do what they need to feel comfortable in participating again in society.”

Los Angeles has yet to finalize reopening rules, and California counties have the option to impose their own restrictions, despite the new state government, which is in effect until October 1.

In Los Angeles, according to John Shook, co-owner of Jon & Vinny’s and four other local restaurants, it was a “yo-yo game” throughout the pandemic. “We make day-to-day decisions.”

Shook said he will probably make it unnecessary for guests and servers to wear masks. But the difficulty of finding free workers also makes it difficult to reopen at full capacity.

Personnel crisis

Along Delray’s Atlantic Avenue, visitors returned, but many employees did not, according to Laura Simon, executive director of the City Center Development Authority.

When businesses temporarily closed during lockdowns, many employees found work elsewhere or looked for other areas of work with less risk of contact with strangers. Others chose to stay on unemployment benefits, reinforced on the $ 300 weekly supplement from the federal government, extended through September.

Restaurants “open for dining indoors and then continue to eat outdoors as well. [trying] to provide the level of service that their guests are used to, ”said Kolokotronis. “We are seeing quite a lot of concern about how to balance this. Those who work in these restaurants work crazy hours and often burn out badly. “

The inventory is an additional concern as production in factories has not returned to pre-pandemic levels. This made Megan Mignano, president of three womenswear stores in downtown Delray, wonder about the potential these stores are missing out on.

“People say, ‘I can’t do anything for a year. I’ll do my best and buy this dress for $ 400. ” We cannot keep the goods in the warehouse fast enough, ”she said.

A tale of two markets

Many retailers have been operating in New York since increased to 50 percent in March. Around the same time, more opportunistic businesses began to consider expanding, given the rise in job vacancies and low rents.

“The situation is getting a little more normal every week,” said Brandon Singer, founder of Retail by MONA brokerage company.

Hampton Inn Miami Beach Mid Beach (Hampton Inn)

However, as noted by Peter Braus, CEO of brokerage Lee & Associates NYC, deals are being made primarily in neighborhoods rather than downtown.

“I called it the donut hole,” he said.

This donut hole is exacerbated by the slow return of office workers as well as the lack of tourism. NYC & Company estimates that domestic travel to New York City will return to its 2019 baseline no earlier than 2023. For international travel, this will take until 2025.

The struggles of retailers can only be surpassed by the struggles of hotels. American Hotel and Inns Association predicts Revenue from hotel rooms across the country will hit $ 110 billion this year, well above last year’s disastrous numbers but still 34 percent lower than in 2019.

“It won’t be profitable for at least a year,” said Vijay Dandapani, CEO of the New York City Hotels Association.

Some hotels have made some headway with reopening anyway, starting a process of re-hiring, housekeeping, and welcoming guests.

John Fitzpatrick, who operates two hotels in Midtown, reopened his 687 address on Lexington Avenue in May after darkening for over a year. Although his other hotel, located near Central Station, was open throughout the pandemic, it was not uncommon to have fewer than 10 rooms occupied at any given time. At one point, the hotel was viewed as a maternity hospital for a local hospital overcrowded with Covid-19 patients.

“When I compare myself to other hoteliers in Miami, we get 600 [guests] night for the rooms, and they can just give the price, we are just fighting here for everything we can, ”Fitzpatrick said.

Indeed, the 100-room Hampton Inn Miami Beach Mid-Beach has had a turning point. Occupancy was about 20 percent last year and the average daily rate was less than $ 100, said Todd Benson, director of Pebb Capital, the hotel owner. According to him, the hotel was “in the red” for most of last year, unable to cover costs and pay off debts.

“There was a struggle until February,” he said. Around the same time, occupancy rose to 37 percent and the average daily rate rose to $ 125. Occupancy rose to the mid-70s in March and April and reached 80 percent in May. The average daily rate this month was close to $ 200.

Benson is banking on further growth in tourism when the cruise industry reopens. The CDC has approved a Royal Caribbean cruise, scheduled to depart June 26 from Fort Lauderdale to the Caribbean. It will be the first paying cruise ship to leave the US in more than a year.

Small businesses also see profits. Coral Gables’ Fine Line Furniture & Accessories experienced a change in April and May, according to President Brianna Brown, with attendance increasing 50 percent in those months over the previous year.

“It looks like all consumers are happy to leave again,” she said. “They want to touch and feel everything. It has become a social thing. “

For South Florida restaurants, business has not only returned, but in many cases is stronger than it was before the pandemic.

“Restaurants are already having their best selling years,” said Lyle Stern, president of the Lincoln Road Business Improvement District.

This is good news for Terranova, Bittel said, as all of the deferred rentals in the last months of last year have been paid.

But not all of this was positive for the landlord and his tenants. Regal Cinemas at Terranova’s Shadowood Square near Boca Raton is still closed after the chain of movie theaters closed for the second time across the country in October after a brief reopening last August.

The judge ordered Regal to pay $ 807,118 in rent for the seat in April.

Bittel said he was not worried about losing money on the 45,000-square-foot space, noting that Terranova and Regal are close to a deal to reopen. If that doesn’t happen, he said, another theater chain will want to move.

Still, the record-breaking restaurant business greeted Bittel, who said the pandemic had caused the worst economic downturn he had seen in 40 years.

“In April and May of last year, we were all shut down and locked down, and as a business owner, we were terrified of what the future would be like,” he said. The restaurant boom “has led to sales exceeding pre-pandemic sales in 2021.”


Source link