Marketwatch June 26, 2020

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TRENDS OR BLIPS?

OFFICE

While there may be a downward shift in National office leasing, there has been a surge of North Georgia demand for 2,000 SF or less in space during the last 30 days. That interest runs the gamut from those seeking personal “isolation” space, new business startups resulting from layoffs or early exits and businesses restructuring common space with A, B or C teams alternating days in and days out. One landlord we know leased 9 such spaces, 400 to 2,000 SF in the last 5 weeks…TREND OR BLIP…we think TREND.

INDUSTRIAL

Strong demand for the Invisible (there are not many choices) 50 to 100,000 SF and while we have seen our region absorb over 4 million SF of Big Box space since December, future Mega sites are quickly evaporating. Industrial land calls have increased 6-fold over the last four weeks as well as demand for flex space under 3,000 SF with roll up doors. TREND OR BLIP…we think TREND.

RETAIL

Despite the national retail, doom and gloom, regionally we still see serious lookers in specific categories. Restaurants planning drive through “only” locations, grocers looking for infill and distribution locations and auto maintenance (up-keep – tires, wash, lube) are hot categories. TREND OR BLIP…we think retail is always a BLIP. :)

MEDICAL

Limited activity. Medical providers are cautiously evaluating patient flow, patient wellness, and patient care. The real shake up is in long-term Senior Care now under an intense wellness/care microscope. The State mandates will slow Personal Care and Memory Care expansions and costs for such care will surge. TREND OR BLIP… it is too early to tell, we think more of a TREND than a BLIP.

QUOTE OF THE WEEK

“Crisis decisions are made with 10% of the information and 100% of the consequences.”

LABOR TRENDS

OTHER VOICES

HOME IMPROVEMENT

“It’s a Bad Time to Be a Squeaky Floorboard.”

Despite a global retail slowdown, the home improvement sector has been…improving. Stay-at-home orders have been prompted bored Americans to level up everything from the duvet to the driveway.

•  Lowe’s smashed Q1 earnings expectations, reporting a 28% increase in net income.
• Home Depot described “triple-digit” growth in its online business in early April, on top of a 6.4% bump in same-store sales.

But home improvement has made its way past the foyer and into the great outdoors.

•  Inflatable pools, egg-laying chickens, patio furniture, and trampolines are all enjoying noticeable sales bumps.
• Americans are discovering gardening like the hunter-gathers: W. Atlee Burpee & Co., a seed company, had the highest sales of any month in its 144-year history in March.
• Pool sharing services Swimply (it is a real thing) reported a 1,200% increase in bookings between February and March.

Even before the pandemic, home improvement was proving resistant to retail malaise: Last year, sales were growing at almost twice the rate of the broader retail sector. That’s likely due to 1) rising home values 2) millennial homeowners’ purchasing power and 3) the country’s aging housing stock.

CITY FUTURE 

The corona virus pandemic strikes at the heart of a city’s engine: its social interactions. As cities ease lock-downs, they will have to ensure those face-to-face experiences can occur while keeping everyone healthy.

• Transportation:  Public transportation is an essential service, but safety measures can be put in place to protect passengers and workers. Think social distance markings and quotas on the number of riders in a single train car. Also, bye-bye Uber Pool.
• Retail: Things will get weird. As hybridization accelerates, a store could be a showroom, a delivery warehouse, a restaurant, and a pop-up market all in one. A 10-year commercial lease in a single-use building will no longer be standard.
• Culture: Expect every event to feel like a Rays game. When sports and theater do return (it may be many, many months), capacity at venues will be limited with chairs left open in between people. And if you thought coughing was frowned upon before….
• Design: The pandemic showed we need to be prepared to construct new buildings in a hurry and transform others from their original uses. We all saw pictures of those new hospitals in Wuhan going up in two weeks – that was only possible through “modular construction,” when a building’s new components are prefabricated offsite.

Typical city life we once took for granted will become a real hassle. But we’ll get used to it.

WORK FROM HOME BECOMES WORK FROM ANYWHERE

• “Despite this being one of the most unusual quarters I have ever experienced, “CEO Bob Martin said, “I am pleased to report that we were profitable and generated positive net cash from operations.”
• “One new trend we are seeing is an evolution from ‘work at home’ to ‘work from anywhere’ as RV buyers use their new RVs as their office wherever they are, or wherever they want to be.”

Many white-collar workers, freed from the confines of their office, are realizing they don’t actually have to work from their literal home, either. And their wanderlusts are giving a boost not only to RV companies, but to vacation rental platforms that were decimated by lockdowns.

Take Airbnb, which cut 25% of its workforce last month. Now it says more U.S. listings were booked between May 17 and June 3 this year than the same period in 2019.

• “Work from home is becoming work from any home,” CEO Brian Chesky told Bloomberg, adding that Airbnb has more listings now than before the pandemic.
• The surprising rebound in demand means Airbnb is not ruling out an IPO this year – something that seemed inconceivable in April.

What do companies think? There doesn’t seem to be a true consensus yet. Some Silicon Valley heavyweights like Twitter have embraced the “work from anywhere” approach. Others, like Cisco, are slowly bringing employees back to the office, albeit with elaborate tech to keep them safe.

RV’s could be the “new commercial real estate.”  Norton Native Intelligence™ saw this in real time when the portfolio manager of one of our managed assets showed up in his new RV, traveling property to property across the South in a mobile office, mobile transport and a self-contained hotel room vs flying City to City pre-pandemic.

WE ARE N THIS TOGETHER…

NORTON NATIVE INTELLIGENCE

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