Oh 2020! We are not sad to see you go!
We would be remiss if we didn’t write the typically required “end of the year” article full of amazing memories and happenings during the course of the year. Don’t get me wrong, there HAVE been amazing happenings this year. But for the most part, I for one, will not miss 2020.
One cannot question that the topic of the decade is the Covid-19 pandemic. What started out as a “uh oh” moment back in mid-January, turned into full blown panic mode around the world near the end of February. Officials across the globe were just beginning to realize the serious nature and rapid spread of the new Corona Virus-19. And regardless of which side of the aisle you are on, no one can deny the impact that the virus has had across the world. As world governments began to suspect that this was not going to simply go away, warnings and closings began. Air travel was severely restricted, restaurants closed and emergency rooms were filling up. Temporary Covid-19 specific hospital floors were designated and pop-up hospitals became a perceived necessity.
Towards the end of March, the country had largely shut down. Working from home became the every day norm. Social distancing was the new buzz word and masks became a fashion statement. But what about the commercial real estate industry? What affect were the shut downs and travel bans having on in-motion real estate deals, investors and buyers?
The pandemic has been devastating for restaurants across the U.S.. Travel and Leisure estimate that over 100,000 restaurants have closed due to the pandemic. Smaller, locally owned dining establishments have suffered the most permanent closures.
While larger franchised corporate restaurants have faired some better, even the temporary closures meant a huge financial loss.
These permanent closures have flooded the real estate market with turn-key restaurant space. And most of the vacated spaces remain unleased and on the market. And privately owned retail stores, hair salons and gyms have also suffered as they were deemed very early on as non-essential businesses. Again, flooding the commercial market with retail space for lease and for sale.
The only sectors that seems to have come out largely unscathed are the industrial, data storage, e-commerce and lab/medical sciences sectors. Many large corporations are vying for space in prime locations such as Philadelphia, Atlanta and Houston. The mass exodus out of California for several tech giants have fueled the markets in other major cities.
So, where does that leave the Treasure Coast and surrounding counties? While we have certainly suffered our share of temporarily and permanently closed small businesses, we are booming in industrial and warehouse deals. Land that has been zoned for industrial use is a very hot commodity right now. Are these large corporations just land banking or will there be new manufacturing and distribution hubs popping up in Martin and St. Lucie counties?
The largely undeveloped stretch of US 1 between Tequesta and Hobe Sound is drawing the attention of several local developers with approved plans for several retail strip malls, a self storage facility and an Assisted Living Facility on the books for 2021. Publix will also be opening a new location at US 1 and Osprey late fall of 2021. Speculation is brewing as to which location they might be closing in response to the new one opening. As that area grows in population, a closing might not be necessary.
The take away is this; navigating the CRE market in 2021 is going to be interesting. As e-commerce heats up, brick and mortar locations are closing and/or shrinking their foot print. Can these locations be reimagined? Will the tech giants occupy all the space they are building? As Florida’s Space Coast is ever expanding, will the trickle down effect be seen here on our coast? There are definitely a lot of unanswered questions and the fall out from 2020 remains to be seen.
If you own CRE and are curious what the market value is, please call us. If you are looking to jump into the CRE market as an investor or owner, please call us. We have over 70 years experience in the Commercial markets with 30 years here on the Treasure Coast.