7 Trends Emerging in Post-COVID Consumer Real Estate
We are witnessing sweeping changes in the consumer real estate sector. Some have come as a result of Covid-19, but this pandemic has only accelerated most.
As we learned a dozen years ago, recessions can throw open the door to opportunities for market disruption. After the Great Recession, two unicorn companies were launched: Airbnb and Uber. Unique direct-to-consumer retailers like Warby Parker emerged, and discount chains such as TJ Maxx and Ross thrived.
The aftermath of the current economic downturn will mirror those of the past. Recessions force leaders to evolve and leave the feeble in the dust. Tens of years ahead, we will look back at those that seized the opportunities of today and grew into booming brands.
What can we expect?
1. Technology Will Win
• Retailers too weak to invest in technology will fall off sharply.
• The convenience of “click and collect” will stick, as well as mobile ordering and touchless payment.
2. Omni-channel Acceleration
• E-commerce was already on the rise, and now even skeptical consumers are adopting it.
• Stores will become spaces to help retailers enhance customer experience, including in-store pickup and reverse logistics centers.
3. Suburbia Strong
• A city-to-suburban migration pattern has already started as people are more cautious, seeking more distance from one another, and more space for working from home.
• A vehicle commute doesn’t seem so bad as opposed to congested public transportation, and the convenience of suburban retail has even more appeal.
• As people return to shopping and dining, many will remain cautious of picking up items that have come in contact with others, pushing shopping carts, and sharing credit cards.
• Contactless payment methods, such as Apple Pay and “click and collect” apps will thrive.
5. Business-Friendly Permitting
• Higher vacancy in the near term and the resulting tax revenue decline will encourage restrictive municipalities to loosen permitting.
• Drive-thrus and pick up windows will be viewed with less negativity when communities look to restrict guest counts in an establishment.
• Liquor licenses may become easier to obtain to spur the rebuilding of the restaurant industry.
6. Malls May Look Different
• With many department stores teetering on the edge of bankruptcy (several have already filed), COVID will likely push a few over. Closed anchors allow retailers to enforce their co-tenancy clauses, permitting them to either close or demand rent relief. Both will have an industry-wide ripple effect.
• Open-Air centers and spaces that adapt to allow for a social distance, creatively, will be more apt to renew our comfort with physical closeness.
• Curbside pickup will be a new fixture.
• Virtual events and programming may become the new placemaking.
7. Hyper-Local – Here to Stay
• The pandemic has motivated consumers to double down on shopping local. Consumers understand “shop local,” or there will be no local.