San Antonio Express-News (Sunday)
The shakeout for retailers is just starting
permanently shuttering stores during the economic crisis brought on by the pandemic. Coresight Research, a research and advisory firm, estimates as many as 25,000 stores could close this year, potentially leaving gaping holes in shopping centers.
In recent years, mall operators have courted businesses such as gyms and movie theaters in a bid to draw more foot traffic by turning their spaces into lifestyle and entertainment destinations. Those enterprises are struggling now because of shutdowns and safety concerns.
Until the virus arrived, gymgoers probably didn’t notice just how much their fellow fitness buffs breathe during their workouts. It’s a lot.
“These are the types of categories that we were really banking on for retail, and we merchandised around the last several years,”
Martindale said. “There’s going to be a big shift in that.”
Outdoor shopping hubs currently have an advantage since people feel safer returning to open-air environments. Customers also are staying closer to home and turning to local businesses, which presents an opportunity for some shopping centers.
“Consumers really want to support their local economies and their mom-and-pop operators and the small businesses that are in their communities,” she said. “If a shopping center owner and a retailer can really tap into that, there’s huge opportunity to capture that customer who’s going to be sticking closer to home for the foreseeable future versus off traveling the world.”
It probably will take several quarters to get a handle on how the pandemic has affected retail vacancy. The future of offices, with many employees working from home, and hotels, with travel upended, will also factor into how quickly, or slowly, stores recover.
It’s also unclear how migration trends will take shape. Residents in cities such as New York hightailed it out to the suburbs as coronavirus cases rose and businesses shut down, and it’s too soon to tell whether they will make their moves permanent.
That could be a boon for smaller cities that have watched their populations fall in recent years.
Regardless, the shifts spell a new way of doing business for brick-and-mortar retailers.
So how is retail in San Antonio faring?
Malls and numerous stores have reopened, but it’s unclear how a recent spike in COVID-19 cases will affect customers’ comfort with venturing out in the near future. Some restaurants and shops temporarily closed due to the surge.
Stickers and signage pepper aisles, reminding customers to practice social distancing, and hand sanitizer is a staple at checkout counters. Restaurants are operating at limited capacity, and Gov. Greg Abbott recently ordered bars and tubing and rafting outfitters to close again.
Unsurprisingly, a pair of reports indicates activity is slowing down.
Leasing activity — new leases and renewals — is down 58.5 percent from a year ago, according to a June snapshot by NAI Partners, a commercial real estate firm. Net absorption, which refers to the change in occupied space, is also down.
Some landlords and tenants are renegotiating leases, working out new terms or in some cases adding pandemic-specific language, said Daniel Taylor, managing director of retail at CBRE. Retail occupancy dropped to 94.3 percent in the second quarter, according to the firm, and it’s expected to keep declining.
“We are projecting this will be a trend through the end of the year or until consumer confidence rebounds and people return to the stores and restaurants,” Taylor said.
As with every industry, there are winners and losers. Grocery stores, gas stations and sporting goods stores are bright spots within retail, but other businesses are hurting.
“Stores that require in-person, longer contact transactions such as apparel stores or full-service restaurants are still being significantly impacted by lower numbers in shoppers and diners,” Taylor said.
madison.iszler@express-news.net