Just Sold: The Tire Choice in The Villages, FL

Ground + Space today announced the sale of The Tire Choice in The Villages, Florida. Michael Zimmerman exclusively marketed the property, which sold within 2.5 percent of the asking price to an all-cash 1031 buyer. This listing garnered multiple offers thanks to the property’s strong corporate tenant and The Tire Choice’s status as an essential retailer.

This property is a prime example of a stable, income-producing asset that requires no landlord maintenance. The Tire Choice’s NNN lease features a corporate guarantee, multiple five-year renewal options and scheduled rental increases. The Tire Choice is conveniently located along a dense retail corridor that includes other national tenants like Publix, Walmart, Bealls, The Fresh Market and Red Lobster.

The Tire Choice benefits from an ever-growing consumer base as The Villages continues to grow in population and popularity. Forbes recognized The Villages as one of the “25 Best Places to Retire” in the United States for the second time in 2018, and The Villages was recently named the best-selling master planned community for the seventh consecutive year in 2020.

About Ground + Space

Ground + Space is a net lease brokerage firm that leads with an emphasis on personalized relationships. Michael Zimmerman and team have curated a brokerage firm and investment sales platform focused on boutique amenities and down-to-earth service. During these uncertain times, Ground + Space remains dedicated to providing best-in-class services and results to our clients. We have several listings available featuring retailers that are in a prime position to succeed in a post-pandemic economy. Contact us today to find out more!


Third Quarter STNL Report

In the days of coronavirus, it’s easy to become overwhelmed by all the bad news splashed across newspaper headlines, television chyrons and on social media. At Ground + Space, we strive to find the silver linings in even the most desperate of situations in order to provide our clients with a more comprehensive outlook on the economy as it relates to the commercial real estate sector. Let’s take a look at some of the major takeaways from the first few weeks of the third financial quarter of 2020:

STNL Properties are Poised for Success

Popular single-tenant net leased (STNL) properties include many essential retailers. Quick-service restaurants (QSR), auto parts stores like The Tire Choice, convenience stores, home improvement retailers and drugstore giants like CVS Pharmacy have all survived the COVID-19 pandemic relatively unscathed thus far. Not only are net-leased assets showing resilience in the face of a global pandemic, they are also properties that continue to attract capital in times of economic downturn.

What’s the secret to their success? Numerous national chains—like Wendy’s and McDonald’s—were aided by in-place drive-thru service, while more traditional restaurant chains and other brick-and-mortar essential retailers benefited from robust delivery, carryout and curbside pick-up platforms. Although many of these retailers reported a dramatic decline in foot traffic, those same retailers have seen profits soar as consumers increase the size of their receipts. Lowe’s and The Home Depot in particular set record highs for sales in the second financial quarter.

Power and Lifestyle Centers Outperform Expectations

Traditional enclosed shopping centers and malls have long been on the decline, but lifestyle and power centers have remained top of mind for both investors and consumers. The prevalence of essential retailers in these types of shopping centers—especially well-known grocery anchors like Whole Foods—has allowed operations to remain strong. In fact, only six percent of net absorption for the year thus far has occurred within this particular sector. A whopping 25 percent of newly vacant space has occurred at malls as retailers like GNC, Victoria’s Secret and Gap announced massive closures. As the market resizes, power and lifestyle centers will most likely attract both tenants and shoppers from malls as they begin to close for good.

Consumer Spending Begins to Recover

Although there has been little progress made regarding extending benefits from the original COVID-19 stimulus package, some segments of the country’s population have begun spending again. By June, many markets saw retail sales increases near pre-pandemic levels. However, only time will tell if this trend will continue into the third and fourth financial quarters. Several states have slowed or halted their reopening plans as new clusters of positive COVID-19 cases arise. If these trends continue, consumer confidence and, in turn, consumer spending, may decline yet again.

Ground + Space is Here to Help

Ground + Space is a leading commercial real estate firm that specializes in single-tenant and retail NNN investments. We have several listings available featuring retailers that are in a prime position to succeed in a post-pandemic economy. We are committed to providing up-to-date information and best-in-class services to clients during the COVID-19 pandemic and beyond.

Stay Safe and Informed

The Centers for Disease Control and Prevention (CDC) offers daily updates and other information about COVID-19 symptoms and testing in the United States. Johns Hopkins University (JHU) has created a resource to help inform the public and advance comprehensive understanding of the novel coronavirus and its effects backed by experts in global public health, infectious disease and emergency preparedness. Additionally, the World Health Organization (WHO) continues to track the number and location of confirmed cases of the virus across the globe.


Coronavirus Update: State of the Market

The month of July shattered records for new coronavirus cases, hospitalizations and deaths. Unlike in the months of March and April, the epidemic is affecting both urban and rural areas in equal measure. The effects of social distancing, store closings and high unemployment have led to an economic downturn, which has impacted even the strongest segments of the commercial real estate sector.

Commercial Real Estate Prices Wane

As expected, prices for commercial real estate assets weakened in the second financial quarter of 2020. Properties with a smaller price tag (between $1-$4 million) fared better than their higher-priced counterparts, which saw a decline in activity of around 38 percent. Sales totals are also down when compared to previous years. However, this pricing weakness was not felt in every sector. The industrial sector was the only property type index to post gains. This is due in large part to the accelerated adoption of e-commerce, which has in turn supported industrial demand for warehouse space.

GDP Declines in Second Quarter

The United States saw the sharpest decline in its gross domestic product (GDP) in the second fiscal quarter of 2020 since the federal government began tracking this data in 1947. From April to June 2020, the GDP fell at an annualized rate of 32.9 percent. This was due in large part to the widespread shutdown measures imposed by governors across the country as COVID-19 began its resurgence.

To put things into perspective, the GDP only fell by 8.4 percent during the worst three months of what is now called “The Great Recession” in 2008. Economists expect GDP growth to return in the third financial quarter, but the rate is largely in question as more states are pausing or reversing their lockdown orders.

Retailer Spotlight: Wawa

Although the list of retailers filing for bankruptcy grows larger on an almost daily basis, some popular retailers are taking proactive steps to provide long-term solutions for a post-coronavirus world. One such retailer is Wawa. The Pennsylvania-based convenience store chain recently announced plans to build its first-ever freestanding drive-thru location in Township, Pennsylvania. This will be the brand’s first store focused solely on drive-thru and curbside pick-up services for its customers.

According to Terri Micklin, Wawa’s Director of Construction, the company hopes to “learn from the layout, workflow and traffic flow at this location” as Wawa explores multiple alternatives to its traditional store formats. At least one other Wawa property currently under construction—this one in Westhampton, New Jersey—will benefit from a drive-thru feature.

Ground + Space is Here to Help

Ground + Space is a leading commercial real estate firm that specializes in single-tenant and retail NNN investments. We have several listings available featuring retailers that are in a prime position to succeed in a post-pandemic economy. We are committed to providing up-to-date information and best-in-class services to clients during the COVID-19 pandemic and beyond. Are you looking for advice on whether to sell one of your assets? Please contact one of our brokers for specialized guidance during this time.

Stay Safe and Informed

The Centers for Disease Control and Prevention (CDC) offers daily updates and other information about COVID-19 symptoms and testing in the United States. Johns Hopkins University (JHU) has created a resource to help inform the public and advance comprehensive understanding of the novel coronavirus and its effects backed by experts in global public health, infectious disease and emergency preparedness. Additionally, the World Health Organization (WHO) continues to track the number and location of confirmed cases of the virus across the globe.


COVID-19 CRE News: July Updates

Thanks to a surge of COVID-19 cases in new hotspots across the country, commercial real estate investment activity has slowed considerably. The Ground + Space team have been hard at work tracking the effects of the novel coronavirus on the commercial real estate industry, both in our home state of North Carolina and beyond. Below, we take a look at some of the top headlines from the first half of the month of July:

Decline in National Investment Activity

Owners and investors remain cautious regarding sales of retail assets. This trend has permeated markets across the country, especially those in fast-growing cities. Some locales that have seen steep drop-offs in commercial sales activity include Raleigh, Seattle, Nashville, Atlanta and even Washington, D.C. Historically, major markets such as New York, Miami, San Francisco and Los Angeles are the first to recover in terms of sales volume following economic downturns. That may not be the case this time around.

Any future increase sales activity will likely be tied to areas that can sustain recovery from both a public health and economic standpoint. There is a glimmer of hope on the horizon: Most markets around the country saw an increase in deal volume in the month of June. This could signal an uptick in deal velocity in the third and fourth quarters of 2020.

Retail Spending Increased in June

Retail sales in the United States rose approximately 7.5 percent in June. This is due to the increase in store openings across the country as retailers welcome back guests to their brick-and-mortar locations. In June and July, consumers have been spending more in four key sectors: automotive, clothing, furniture and electronics.

Although increased retail activity is a welcome harbinger of good news, continued recovery in this sector will be determined by the ability of cities and states to remain open in the face of rising COVID-19 infections. Something important to keep in mind: Despite this increase in activity, total retail sales for the second quarter of 2020 were still down by 8.1 percent.

Retailers Continue to Downsize Footprints

National retailers continue to downsize their retail footprints, and some have even turned to Chapter 11 bankruptcy proceedings for protection. New York & Company parent RTW Retailwinds is just one of many clothing retailers to join the likes of J.C. Penney, Brooks Brothers and Neiman Marcus in filing for bankruptcy.

Banking giant Wells Fargo recently announced a proposed $10 billion cut in annual expenses. This move will shrink the brick-and-mortar footprint of the nation’s third-largest bank substantially. In the short term, Wells Fargo plans to consolidate its brick-and-mortar locations, which would include not only bank branches, but field offices and corporate sites as well. The move comes as more and more Americans move to digital and mobile banking.

A Bit of Good News

While it’s disheartening to hear that many retailers are shutting their doors permanently, others have found a way to pivot their business models to align with recent events. One such retailer is Tropical Smoothie Café. Since March 1, 2020, the fast-casual café concept has opened 35 new locations. Additionally, the company has signed at least 103 new franchise agreements in 2020.

Chipotle is also looking to expand its footprint and plans to hire as many as 10,000 new employees during the next few months. The concept now has a presence in 32 states, and many of its new restaurants feature a drive-thru lane (dubbed “Chipotlane”). Chipotle expects that more than 60 percent of its new restaurants will feature this “Chipotlane”—a measure that will allow more locations to remain open during the pandemic.

Ground + Space is Here to Help

Ground + Space is a leading commercial real estate firm that specializes in single-tenant and retail NNN investments. We have several listings available featuring retailers that are in a prime position to succeed in a post-pandemic economy. We are committed to providing up-to-date information and best-in-class services to clients during the COVID-19 pandemic and beyond. The IRS 1031 tax deadline is less that one week away, so please contact one of our brokers for specialized guidance during this time.

Stay Safe and Informed

The Centers for Disease Control and Prevention (CDC) offers daily updates and other information about COVID-19 symptoms and testing in the United States. Johns Hopkins University (JHU) has created a resource to help inform the public and advance comprehensive understanding of the novel coronavirus and its effects backed by experts in global public health, infectious disease and emergency preparedness. Additionally, the World Health Organization (WHO) continues to track the number and location of confirmed cases of the virus across the globe.


Changing Trends in Response to COVID-19

During the past few months, commercial real estate investment volume has dropped approximately 30 percent. This has made deal-making more difficult for both brokers and investors. Today, we will dive into a few of the trends that are reshaping the commercial real estate industry and how investors and brokers can capitalize on these changing dynamics.

Investors Search for Property Bargains

It is unsurprising to find that the value of commercial real estate assets has declined in recent months. This is a direct result of falling occupancy and rental rates. However, many investors are taking this economic downturn as an opportunity to acquire distressed properties. A distressed sale can include the following: auctions, foreclosures, bank-owned sales, short sales and deed in lieu of foreclosure transfers.

According to CoStar data, distressed property sales have surpassed that of traditional hotel and retail properties—two of the sectors hit hardest by the coronavirus pandemic. In June, distressed retail sales were at 2.2 percent, and distressed sales made up 4.4 percent of all hotel sales. What does this mean? Right now, investors are shifting their focus away from core assets in anticipation of future repricing opportunities.

E-Commerce Effects on Commercial Real Estate

E-commerce has gained in popularity over the past decade. Current e-commerce retail penetration rates have grown to 20 percent. This number is expected to increase significantly due to the COVID-19 pandemic and its lasting effects on the worldwide economy and consumer shopping habits. How will the commercial real estate landscape adjust to this “new normal?”

As consumers visit brick-and-mortar stores on a less frequent basis, lower-quality, struggling assets—like aging enclosed shopping malls—will either shutter or be repurposed into mixed-use developments. Restaurants, quick-service restaurants (QSR) and fast food retailers with drive-thru service will remain essential, but their reliance on delivery and takeout platforms will increase. Delivery platforms will also be critical to companies like Whole Foods and other grocery store chains. Experiential spaces—like movie theaters, gyms, fitness studios and even casinos—will also be affected as individuals consume more at-home solutions like Netflix, YouTube and Peloton.

Retailers React to COVID-19

While many retailers have begun to liquidate assets, close storefronts and file for bankruptcy protection, others have managed to meet these challenging times with new, innovative ideas. For instance, Walgreens Boots Alliance (the parent company of Walgreens) has partnered with VillageMD to introduce full-service doctor offices co-located in stores within more than 30 U.S. markets. This news comes as retail giant Walmart unveiled its plan to open freestanding Walmart Health Facilities and CVS Health begins to expand its HealthHub store format.

Ground + Space is Here to Help

Ground + Space is a leading commercial real estate firm that specializes in single-tenant and retail NNN investments. We have several listings available featuring retailers that are in a prime position to succeed in a post-pandemic economy. We are committed to providing up-to-date information and best-in-class services to clients during the COVID-19 pandemic and beyond. The IRS 1031 tax deadline is less that one week away, so please contact one of our brokers for specialized guidance during this time.

Stay Safe and Informed

The Centers for Disease Control and Prevention (CDC) offers daily updates and other information about COVID-19 symptoms and testing in the United States. Johns Hopkins University (JHU) has created a resource to help inform the public and advance comprehensive understanding of the novel coronavirus and its effects backed by experts in global public health, infectious disease and emergency preparedness. Additionally, the World Health Organization (WHO) continues to track the number and location of confirmed cases of the virus across the globe.


Retailers Adjust to Changing Consumer Shopping Habits

As states across the country begin the process of reopening their respective economies, retailers are coming to terms with the financial and social impacts of COVID-19 on sales and consumer shopping habits.

Retail Sales Slowdown

The month of April saw an estimated $150 billion loss in retail sales. Those businesses and retailers deemed “essential” during the pandemic—think supermarkets, pharmacies and big-box stores like Target and Walmart—fared better than their non-essential counterparts. The relative success of essential retailers throughout the COVID-19 pandemic has helped offset struggling retail sectors. Movie theaters, health and fitness retailers, childcare centers, enclosed shopping malls and casual dining restaurants have all suffered during this extended national lockdown period.

Case Study: Best Buy

In the midst of the COVID-19 pandemic, the electronics and home appliance retailer Best Buy has shifted to something of a hybrid retail model. When the retailer voluntarily closed all of its stores on March 22, Best Buy pivoted to a curbside pick-up model that complemented its home delivery services. Best Buy’s curbside business model led to triple digit gains in its e-commerce channel. In late May, company executives reported that Best Buy was able to retain at least 81 percent of its sales volume and saw a staggering 155 percent increase in its online sales.

With states easing stay-a-home restrictions, the number of businesses that are now open to the public has started to increase. Best Buy has chosen to reopen select stores for appointment-only shopping, and stores that remain shuttered still offer curbside pick-up of online orders. Store remodeling plans of at least $800 million have been put on hold. Instead, Best Buy plans to spend at least $650 million on investments in technology and automation.

The Future of the Retail Experience

Best Buy’s successful hybrid retail model could be a blueprint that retailers can use in a post-pandemic world. COVID-19 has caused a majority of shoppers to adopt new behaviors, from utilizing e-commerce to buy non-essential items to limiting grocery store visits to once per week. Common practices during the pandemic like social distancing, limited in-store customer capacity and adjusted store hours are likely to be adopted by retailers for the foreseeable future.

In fact, the way retailers do business may never be the same again. Brick-and-mortar store layouts will inevitably change to accommodate new safety protocols. Fewer customers shopping in-store could lead to a shrinking retail workforce. Landlords and property management companies will undoubtedly seek new approaches to filling in vacant spaces in smaller shopping centers. Brands that have shown increased awareness of product and consumer safety during the pandemic are likely to gain more loyal customers. All of these and more will contribute to the ever-changing retail landscape, both in the United States and across the globe.

How can Ground + Space help?

Ground + Space is a leading commercial real estate firm that specializes in single-tenant and retail NNN investments. We have several listings available featuring retailers that are in a prime position to succeed in a post-pandemic economy. We are committed to providing up-to-date information and best-in-class services to clients during the COVID-19 pandemic and beyond. The market changes daily, so please contact one of our brokers for specialized guidance during this time.

How can I stay informed?

The Centers for Disease Control and Prevention (CDC) offers daily updates and other information about COVID-19 symptoms and testing in the United States. Johns Hopkins University (JHU) has created a resource to help inform the public and advance comprehensive understanding of the novel coronavirus and its effects backed by experts in global public health, infectious disease and emergency preparedness. Additionally, the World Health Organization (WHO) continues to track the number and location of confirmed cases of the virus across the globe.


The Future of the CRE Market

The United States economy is feeling the effects of COVID-19 since all non-essential sectors have been in a near-total shutdown since mid-March. Most states around the country won’t be lifting lockdowns and shelter-in-place orders until at least the end of May. The COVID-19 pandemic has sent the country’s unemployment rate soaring to a record 14.7 percent, a level not seen since the end of the Great Depression.

Over the course of the next few weeks, many retailers will slowly begin to open their doors to customers for the first time since the pandemic began. While this is a good sign, the success of any reopening effort will be determined in part by the average consumer’s willingness and ability to venture out to purchase more than essential items like groceries and gasoline.

Economists do not have an answer as to what the full impact of COVID-19 will be on the U.S. economy. However, most economists do agree that there will be a significant negative effect, both in the U.S. and across the globe. How will all this economic news affect the commercial real estate (CRE) market? Let’s take a look.

Sharp Spike in E-Commerce Sales

Several major retailers have been hit hard by the effects of COVID-19. Those retailers who had yet to adjust to changing consumer habits have had to turn to bankruptcy and outright closure over the past few weeks. Some of the retailers affected most by the pandemic are J.C. Penney, Neiman Marcus, Stage Stores, J.Crew and Pier 1 Imports.

On the other hand, retailers like Kohl’s have seen a spike in digital sales even as their brick-and-mortar stores have been closed for at least two months. Online sales grew to a staggering 60 percent of the brand’s total sales in the month of April, and that trend is expected to continue. Walmart has also seen skyrocketing digital sales, led by strong results for grocery and delivery services. Walmart also benefited from being designated as an “essential business.” Throughout the pandemic, all of the retailer’s U.S. stores remained open.

The Health of the CRE Market

The health of the CRE market going forward will be determined by the approaches retailers take to reopen storefronts and the impact of increased e-commerce adoption rates. Many economists anticipate that consumers will continue to rely heavily on e-commerce transactions. Retailers both large and small that can provide customers with a digital shopping platform will fare better than those with no online presence. While standalone retail assets should bounce back to pre-coronavirus levels once treatment plans are in place for COVID-19, many mall anchors, full-priced apparel retailers and mom-and-pop stores in small strip centers might not be so lucky.

Sales activity in the CRE market has fallen by approximately 17 percent since the pandemic began. Despite this sharp decrease in activity, capitalization rates have remained steady. Rates have fallen by only about seven basis points according to CoStar data. Most investors and landlords are focusing on rent collection and vacancy concerns for the time being, but there is still a demand for high-quality SNTL retail.

Experts in STNL Retail

Ground + Space is a leading commercial real estate firm that specializes in single-tenant and retail NNN investments. We have several outstanding retail assets on the market right now. Our CVS Pharmacy listing features a NN corporate-guaranteed lease that was recently extended by 20 years. The Tire Choice property that is currently available is situated within a dense retail corridor in The Villages, Florida and boasts a brand-new 20-year NNN lease. Our team is committed to providing up-to-date information and best-in-class services to clients during the COVID-19 pandemic and beyond. The market changes daily, so please contact one of our brokers for specialized guidance during this time.

Stay Informed

The Centers for Disease Control and Prevention (CDC) offers daily updates and other information about COVID-19 symptoms and testing in the United States. Johns Hopkins University (JHU) has created a resource to help inform the public and advance comprehensive understanding of the novel coronavirus and its effects backed by experts in global public health, infectious disease and emergency preparedness. Additionally, the World Health Organization (WHO) continues to track the number and location of confirmed cases of the virus across the globe.

 


Commercial Real Estate Sales During COVID-19

Although commercial real estate sales have plummeted during the COVID-19 pandemic, some assets are still proving valuable to investors across the globe. Which retail assets are still selling during lockdown? Essential businesses.

What’s an “essential” business?

The exact definition of “essential” varies by location, but the Department of Homeland Security issued guidance on the subject in mid-March. Generally speaking, essential businesses include the following: supermarkets and grocery stores; big-box stores; pharmacies; convenience and discount stores; hardware stores; banks; gas stations and auto repair shops; and pet stores, among others.

Nonessential businesses, on the other hand, tend to be recreational in nature and do not provide needed services related to food, health or financial support. Restaurants fall into this category, but many state and local governments have allowed restaurants to remain open for curbside pick-up and delivery service.

What retail assets are selling right now?

The commercial real estate assets that have been most pursued by investors during the COVID-19 pandemic are single-tenant net lease (STNL) properties. Investors seeking a sense of safety in an uncertain economy are pursuing deals that feature a single-tenant property with a tenant that offers an essential service. These assets tend to boast net leases in which the tenant pays for most (if not all) of the property’s operating expenses.

According to data compiled by CoStar, investors have closed deals on more than 300 single-tenant properties since mid-March. These properties have been leased to tenants like CVS Pharmacy, McDonald’s, Burger King, Dollar General and Chick-fil-A.

Is there still a demand for STNL properties?

In short, yes. Net lease sales performed well in 2019, increasing by at least 11 percent to approximately $78 billion. The biggest driver in sales have been those investors engaged in a 1031 exchange. This particular type of transaction allows an investor to defer capital gains taxes by rolling profits from the sale of one property into a similar (or “like-kind”) property. Because of the COVID-19 pandemic, the Internal Revenue Service (IRS) extended the 1031 exchange deadline to July 15, 2020.

How can Ground + Space help?

Ground + Space is a leading commercial real estate firm that specializes in single-tenant and retail NNN investments. We have two outstanding “essential retail” assets on the market right now. Our CVS Pharmacy listing features a NN corporate-guaranteed lease that was recently extended by 20 years. The Tire Choice property that is currently available is situated within a dense retail corridor in The Villages, Florida and boasts a NNN lease. Our team is committed to providing up-to-date information and best-in-class services to clients during the COVID-19 pandemic and beyond. The market changes daily, so please contact one of our brokers for specialized guidance during this time.

How can I stay informed?

The Centers for Disease Control and Prevention (CDC) offers daily updates and other information about COVID-19 symptoms and testing in the United States. Johns Hopkins University (JHU) has created a resource to help inform the public and advance comprehensive understanding of the novel coronavirus and its effects backed by experts in global public health, infectious disease and emergency preparedness. Additionally, the World Health Organization (WHO) continues to track the number and location of confirmed cases of the virus across the globe.


The Coronavirus Pandemic Reshapes Retail

As many states look to reopen portions of their economies in the coming weeks and months, the team at Ground + Space are diligently tracking the effects of the novel coronavirus (COVID-19) on the commercial real estate industry across various sectors. Although the idea of returning to work is a welcome one in this uncertain economic climate, it’s important to acknowledge that companies will return slowly to an environment forever changed by this virus.

Post-Pandemic Outlook

According to reporting by the Swiss money manager UBS, the retail industry in the United States is heading towards a major shift. Current estimates show that the country stands to lose anywhere between 11 percent to 17 percent of its total store count by the year 2025. (This estimate is based on projections that e-commerce penetration will rise to 25 percent by 2026.)

Companies and retailers that already boast strong online operations and logistics networks—like Amazon, Walmart and Target—have continued to thrive during this pandemic as more and more consumers shop online. These powerhouse retailers are poised to take over market shares left behind as brick-and-mortar retailers close their doors.

The Continued Rise of E-Commerce

E-commerce sales have steadily risen over the past decade. As of the third quarter of 2018, e-commerce sales reached approximately 16 percent of total retail sales in the United States. This trend of rising e-commerce sales has accelerated considerably in response to the global coronavirus pandemic. Stay-at-home orders across the country that have stopped all non-essential business. These conditions have forced retailers both large and small to quickly adopt online marketplace platforms to service customers.

As households across the country make the shift to more online spending, struggling retailers will be forced to either pivot towards an omnichannel approach or rationalize their store counts and future brick-and-mortar expansion plans. Retailers like Macy’s, Inc. and JCPenney Company, Inc. have already made plans to close stores, and other vulnerable retailers are likely to do the same throughout the remainder of 2020.

COVID-19 Impact Across Retail Sectors

Each segment of the retail market landscape is feeling the effects of COVID-19 in different ways. If the UBS estimates are indeed correct, the loss of stores and revenue will be most pronounced in the following sectors: apparel and accessories; consumer electronics; and home furnishings. Because retailers like these make up a large portion of tenant rosters in enclosed shopping malls, many struggling regional shopping centers are expected to close. The retailers expected to weather the storm include essential businesses that are allowed to remain open during the global pandemic, as well as non-essential retailers like home improvement stores and automotive parts stores. Ground + Space has several listings available featuring retailers that are in a prime position to succeed in a post-pandemic economy.

Stay Informed

The Centers for Disease Control and Prevention (CDC) offers daily updates and other information about COVID-19 symptoms and testing in the United States. Johns Hopkins University (JHU) has created a resource to help inform the public and advance comprehensive understanding of the novel coronavirus and its effects backed by experts in global public health, infectious disease and emergency preparedness. Additionally, the World Health Organization (WHO) continues to track the number and location of confirmed cases of the virus across the globe.

How can Ground + Space help?

Ground + Space is a leading commercial real estate firm that specializes in single-tenant and retail NNN investments. Our team is committed to providing up-to-date information and best-in-class services to clients during the COVID-19 pandemic and beyond. The market changes daily, so please contact one of our brokers for specialized guidance during this time.


COVID-19 Impact Across CRE Sectors

The spread of the novel coronavirus (COVID-19) across the United States has caused all but the most essential businesses to shut down temporarily. Although designations often vary from state to state, the life-sustaining businesses that are currently operating across the country include: supermarkets and grocers; farms and food manufacturers; restaurants (take-out and delivery only); hospitals; healthcare providers (like dentists, veterinarians and physician offices); pharmacies (including CVS); banks and post offices; gas stations and convenience stores; and automotive repair shops.

Many of the strategies being implemented by these retailers—like curb-side pick-up—will most likely continue as customers return to work in the coming weeks and months. Large national tenants are better positioned to weather the storm of COVID-19, but the same cannot be said for neighborhood retailers. Each sector of the commercial real estate market has been affected in different ways. Let’s take a look at how the pandemic is affecting three key sectors: convenience stores, dollar stores and shopping centers.

COVID-19 Impact: Convenience Stores

Due to “shelter in place” orders, many consumers are looking to their local convenience stores for fuel, food and grocery items. Convenience stores have become a go-to for shoppers who want to avoid crowded areas and understocked grocery stores. According to the National Association of Convenience Stores (NACS), 52 percent of convenience store grocery sales have increased during the pandemic, despite the fact that fewer people are leaving their homes.

Convenience stores are resilient assets during economic downturns. Additionally, convenience store retailers were quick to address changes related to COVID-19 in their stores. These retailers continue to pivot and adjust as needed, from offering more items that can be taken home (pre-assembled meals, bulk items and toiletries) to removing self-service stations.

COVID-19 Impact: Dollar Stores

Rural and suburban communities have long relied on retailers like Dollar General and Dollar Tree for affordable, convenient household essentials. Because of this, the discount retail market has proven resilient throughout the COVID-19 pandemic. Their unique real estate footprint, coupled with lower price points, put discount and dollar store retailers at a competitive advantage during times of economic downturn.

Because of COVID-19, many consumers are flocking to discount retailers due to strained finances. Dollar stores are a vital, consistent source for inexpensive staple items, and most accept SNAP benefits. While many retailers are struggling to combat the negative effects of “shelter in place” orders, dollar stores have seen a rise in sales. The market for these discount retailers is strong as tenants see continued demand from both new and existing consumers.

COVID-19 Impact: Shopping Centers

Shopping centers have seen a decrease in foot traffic and an increase in vacancies over the past decade due largely to a change in consumer spending habits. The COVID-19 pandemic has created a new set of challenges for both large and small shopping centers. “Shelter in place” orders mean that foot traffic has become virtually non-existent within shopping centers that do not feature essential businesses like grocery stores or pharmacies.

Open-air shopping centers anchored by grocers, drug stores or home improvement stores should expect gains during the pandemic as these tenants have all been deemed “essential.” Customers have begun to visit their local brick-and-mortar grocery stores because of disruptions to the supply chain for many online and warehouse club retailers. In contrast, regional indoor malls and unanchored strip centers will likely experience the most distress during this economic downturn.

How can Ground + Space help?

The team at Ground + Space are committed to providing up-to-date information and best-in-class services to clients during the COVID-19 pandemic and beyond. The market changes daily, so please contact one of our brokers for specialized guidance during this time.

Are you interested in maximizing your return on a commercial real estate investment? Ground + Space is a leading commercial real estate firm that specializes in single-tenant and retail NNN investments. Contact Michael Zimmerman or Brett Sheldon today to find out more about our current listings and our superior services.