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Residents
of state of California received some good news in the past few days. Assuming
our case rates, percent of infection, and equity measures remain steady - we
could be fully open for business in a couple of months. Good news indeed! That
giant sigh of relief you sense is aired by restauranteurs, bar owners, theatre
chains, and gyms. Disneyland, Universal, Knotts, Staple Center and Angel
Stadium will soon welcome back patrons - albeit with reduced levels and safety
protocols. Our lives, in short, could be getting back to some sense of normalcy
- whatever that means.
On
March 20, 2020, I penned a post which appeared in these pages on March 29,
2020. The title - Think Present’s Upended? Wait for Future. Just
how clear was my crystal ball? I decided to check.
From
the archives: “Social distancing, shelter in place, “Coronacation”, learning
from a distance - phases now rooted in our lexicon which weren’t used just one
month ago. My how things have changed - and how quickly! My column from March 1
- in this space - recapped an event I attended the week prior. Hosted by
Northwest Mutual - the gathering focused upon ways to keep more of your
businesses profit. Also reviewed were the five causes of a bear market - one of
which was recession. I cautiously opined that I wasn’t predicting a recession -
even though the disruptions to our supply chains were forming as China suffered
the impact of a workforce largely bridled. Why run around like Chicken Little?
After all, the job creation numbers in February were remarkable. Man was I
wrong! Often stated - you see the big things coming, it’s the little things
that get you! Little indeed - microscopic in fact.
As
our local economy is in virtual lockdown and the raging tsunami of disruption
roils our psyche - will commercial real estate, and it’s owners and occupants
change? Maybe forever? In a word, yes! Indulge me while I recap a few.
Office space. Although we are open for business -
our physical location at 1004 W. Taft in Orange is closed to the public. Agents
can come and go as they please - being mindful of the governor’s guidelines -
but are encouraged to work remotely. Staff members are home bound with an
internet connection to projects that need attention. For the first time in our
office’s 37 year history - we are completely virtual. We own our building with
a partner who services auto loans. Roughly 85 employees - in both companies -
reside in the 21,700 square foot, two story structure. Per agent - we pay
approximately $731 per month in rent - albeit to ourselves. Is space overhead
necessary? Certainly for some companies. However, I’m certain many others will
do the same math and ask the same questions. Nailed it!
Retail establishments. Wow! Traditional retail was
in a world of hurt before the pandemic. Now? Pure carnage. Many stores -
straddling the ledge of viability - just got shoved into the abyss. Few will
return. Sure. The biggies - Walmart, Target, Costco, Home Depot - will rebound
with a vengeance. But Amazon and other on-line portals will consume what retail
business is left. Some restaurants will decide on-line and takeout is more
profitable and adjust with smaller spaces. What will be left is a landscape of
empty storefronts. Investors who rely upon rent from these tenants to service
their debt and fuel their lifestyles? They just got a pay cut. Nailed it!
Automation. Hmmm. I don’t believe a conveyor
system ever called in sick, filed a worker’s comp claim, sued an employer, or
showed up late to work after a crazy weekend. My prediction is manufacturers
and logistics providers - once they navigate the mine field of business
interruption - will restructure accordingly. Less reliance upon employees and
more automation. Akin to lack of preparedness in advance of a big shaker -
local employers were not geared for this level of disruption. Somewhat
nailed it. What I underestimated was the voracious demand for industrial space
that would surge in June of 2020.
Technology. I’m penning this from an iPad on
our living room sofa. Many of you are reading this column on line from your
breakfast rooms. Wednesday my strategic business coach - The Massimo Group -
hosted a webinar entitled “how to be a lighthouse in a storm”. Yesterday, three
strategic partners and I joined a Zoom call to discuss their worlds and some
suggestions on servicing our client’s uncertainty. Sure. This is not new
technology but the ways in which we used it was innovative. Look for expansion
in internet bandwidth, mobile solutions, and other advances in technology.
Tele-diagnosis’s? Wow! Triple nailed it.
Public gatherings. 9.11 changed security protocol
forever. Remember when you could show up to the gate as your flight was revving
to taxi? I do! Or walk into a courthouse through a doorway and not under a
metal detector. Emptying your pockets of wallet, phone, keys and stripping belt
buckles was never required at amusement parks or sporting events until the past
few years. Will we now have our temps checked when we enter the Honda center?
Sorry sir. You’re running a bit hot - we cannot let you in. Will networking
events - chambers of commerce, Provisors, BNI - now be held virtually? How
about city council meetings? No public discourse? Well, maybe that’s positive.
Pro games without fans? Return of the drive-through theatre? Wedding venues, country
clubs, convention halls. Preposterous? Maybe. Maybe not. Think airline security
now vs 2000. A lot has changed in twenty short years. Hmmm. I was a bit
psychic, here. Scary true!”
Allen C. Buchanan,
SIOR, is a principal with Lee
& Associates Commercial Real Estate Services in Orange. He can be reached
at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.