Take these retail numbers lightly
Store vacancies sure to rise under the coronavirus cloud, firm says
Retail is hurting, to putting it lightly, despite the lateststatistics.
That's according to commercial realty brokerage Price Edwards & Co.'s soon-to-bereleased midyear retail market summary, which downplayed numbers in light of the coronavirus and chaos in the economy.
Store, restaurant and other retail space was 9.2% empty in the metro area at the end of
June, up just a little — considering — from8.7% at the beginning of the year.
Now,get ready. "Probably not the right way to market this report, but don't pay much attention to the numbers. Expect more vacancy over the remainder of the year as the year-end numbers will more accurately reflect the effects of current economic conditions," according to the report.
Most of the vacancy increase the first half of the year wasn't related to the pandemic, but rather "general softness in the economy" before the business shutdown, the firm said,
andthenext six months will tell the tale. It won't be pretty.
"Never in modern history have we been in the middle of a global pandemic, social upheaval caused by a racial awakening, an energy bust, and a divisive presidential election all at the same time," according to the report by Jim Parrack, broker and Price Edwards' senior vice president of retail. "And while the pandemic is the biggest problem for retail, the effects of the downturn in our energy sector shouldn't be underestimated. ... What does this mean for our retail market, no one knows with any certainty. If anyone tells you otherwise, do not believe them."
Nationally, "the last three months have been brutal" fortheeconomy, the reportsaid, especially forretail. Sales were down 8% in March, down 22% in April, then came back 17% in May but remained 8% below the prepandemic level, the firm reported, with most nonessential retailers having zero sales for two months.
"But retail i sn't a monolithic market. There were winners and losers. Winners: grocery, dollar s t ores, discounters ( especially Walmart & Target), take-out restaurants, and, of course, Amazon. Losers: f ashion, entertainment concepts, personal services, sitdown restaurants, gyms and fitness. Theaters (along with hotels) fit in their own biggest-loser category," Price Edwards reported.
Oklahoma hasn't been hit as hard a s much of t he c ountry, although tenants and landlords have beenscrambling,with "tenants trying to enhance and preserve liquidity and landlords working with tenants and lenders."
The entire retail world is strained, though — from operations and revenue to loan performance.
The level of retail loans in or past their grace period shot up to 12.53% in May from 1.7% in March, according to New York-based Trepp LLC, a property and commercial mortgage-backed security data analytics company, in a midyear report with Commercial Real Estate Direct in suburban Philadelphia. Most national retail tenants have drawn down credit and demanded relief from landlords, mostly in deferred rent, Price Edwards said. Smaller, local tenants took relief via forgivable loans from the federal Paycheck Protection Program and sought rent deferral, the firm said.
"There was no landlord relief in the CARES Act," Price Edwards noted. "Most have reached out to their lenders for relief and typically received either a few months of interest-only payments or deferral of payments."
The next six months to a year will be critical,the firmsaid.
"Uneven performance by retailers, difficult negotiations between tenants and landlords, closures and bankruptcy ...will be exacerbated by the continued uncertainty added by the pandemic, the protests, the energy bust and the election," Parrack wrote. "If there is another shutdown due to the COVID pandemic, full or partial, it could be devastating to certain retailers."
Submarket stats
• Edmond: Midyear vacancy 9%, compared with 8.4% at the first of the year.
• Eastern Oklahoma County: Midyear vacancy 12.4%, up slightly from 12.1%.
• Moore-Norman: Midyear vacancy 7.4% versus 7.1% at the first of the year.
• South Oklahoma City: Midyear vacancy 15.5%, up from 13%.
• West Central Oklahoma City: Midyear vacancy remained low at 6%, compared with 5.8% at the first of the year.
• Northwest Oklahoma City: Midyear vacancy 11.8%, down from 12.4%.
• North Oklahoma City: Midyear vacancy 7%, up from 6.7%.