Over the past month or two we have watched a lot businesses struggle to weather the virus storm. I’m watching about one or two Tucson business per week close up shop for good. Despite a 14% unemployment rate and a substantial decline in GDP, I have watched some businesses grow massively. Those businesses were ahead of the times and were able to adjust and adapt quickly.
This article is about 10 actions that helped businesses prosper and even grow during these changing times. Most of these tips are going to help businesses prosper during coronavirus times AND normal economic times. It’s all about changing, adapting and prospering.
Retail frontage on Benson Highway
Located ½ mile from the I-10/ Kino Boulevard interchange
Lot Size 21,780 SF - (.50 Acres)
Zoning - C-2, (City of Tucson)
Doors - 12x12
Ceiling Height - 17’
Year Built - 2006
For more info, please contact Max Fisher of Cushman & Wakefield | PICOR
520-465-9989 (call or text)
For more infomartion contact Max Fisher of Cushman & Wakefield | PICOR
520-465-9989 (cal or text)
As we enter the second month of quarantine the Tucson market starts to feel the effects of the shut down. The market activity feels like it has dropped to around 50% of what it was a few months ago. Retail and office activity may be lower than 50%. Industrial, multifamily and residential home sales are decent but still less than normal.
Why is this? Most retail and office businesses have been deemed as non-essential and have shut down while people still need homes, apartments, and industrial businesses (trades companies, distribution of product, and manufactured goods).
Below are a few predictions for the post Covid market.
1) Non-medical office footprints will shrink. With work from home orders, employees are realizing they can do the vast majority of their work from their home office, save day to day travel time and gas money. This will shift the office market substantially. We've already seen this trend in the residential real estate market but Covid is going to force this trend to grow throughout the entire market.
2) Retail businesses impacted by the retail shift will be forced to adapt quicker than expected. We all know about the impact that distribution companies like Amazon, Doordash, GoPuff and others have had on the retail market but now having retail storefronts shut down is impacting this shift big time. I am already starting to see retail businesses shift into industrial spaces and change their business models from walk by and drive by traffic to production in a warehouse, advertising online, and distributing straight to the consumers doorstep. Pay attention to how restaurants are shifting with takeout, social media advertising and production.
3) Interest rates will continue to decrease. As businesses continue to remain shut down, the market will continue to suffer. One of the ways to combat this effect is to decrease interest rates. Obliviously how long we are shut down for will affect the interest rates.
4) Increased migration from metropolitan cities like New York or Seattle. Viruses aren't going away. Cities that have people stacked on top of each other are the virus hot spots. Expect some type of migration to less condensed cities with warmer climates like Phoenix, Dallas, San Diego and Tucson.
5) Last mile distribution will continue to take off. As we are forced to stay home consumers are starting to us last mile distribution companies more and more. Think Instacart, Doordash, Amazon, and other Ecommerce companies. Once businesses open back up there will be a lot of consumers that found a grocery delivery app like Instacart during the shut down that will continue to use Instacart. why spend a few hours driving to the grocery store and shopping when you can have it all delivered straight to your door for the same price?
6) Businesses that seemed to become saturated will start to thin out. A few years ago breweries and gyms started popping up everywhere. These start up businesses usually don't have the capital or reserves that non start-up businesses do have while they all have the same over head. Combine smaller reserves with shutting down the business and more competition........
For more market updates visit Indsutrialtucson.com
The stock market is down, the media is blasting coronavirus on every media platform, and we’re not sure how it will affect our local market. Short term I feel we will start to feel the effects within the next few weeks but the effects will be related to supply chain. Long term, I feel this will help the US as a whole, I’ll get to that in a bit.....
China is the manufacturing powerhouse of the world which makes the US very reliant upon Chinese goods, especially commodities. I have already seen one tenant start to default on their lease due to the supply chain issue. Parts of China have manufacturing shut down and aren’t able to produce and ship their products to US companies which is going to hurt US companies. Home Depot is sold out of masks party because of high demand but mostly because China decided to turn their ships around and keep all of the masks. That’s how powerful China is when it comes to supply chain.
The good news is that the US is realizing how dependent we are on China which may spur manufacturing to continue moving back to the US and possibly at a quicker rate. If the coronavirus continues to stagnate the Chinese economy, we will be forced to start manufacturing more in the US and Mexico. We’ve already realized this with energy and are now ramping up domestic energy production.
For right now I would expect to see Chinese commodities become tougher to find and prices will rise. Slowly, but at a quicker rate than a year ago we will see the supply chain move back to North America. I would also expect Mexico to see manufacturing and supply chain growth, especially since USMCA is in effect now and labor is cheaper in Mexico.
As far as the real estate market goes, I expect industrial to hit a small bump in the road, especially in the distribution market. I would expect manufacturing buildings to lease up and flex buildings to continue to lease and sell at a steady rate. I would expect the residential market to remain strong due to continued high demand and limited supply. This may even create a tougher market for buyers and new construction as a whole, because building materials could increase in cost due to the supply chain being choked by global coronavirus fears.
Long term, bringing manufacturing and supply chain back to the US will create a stronger US economy and help the environment because the US has high environmental standards compared to China.
14,010 SF Industrial building sold off market to Technicians for Sustainability. The former owner was DBLS Holdings.
The building will be used by the solar company, Technicians for Sustainability and West Coast Roofing occupies about 2,500 SF of the building.
This transaction was handled by Max Fisher and Paul Hooker of Cushman & Wakefield | PICOR
Email email@example.com for more details
Rob Glaser & Max Fisher of Cushman & Wakefield | PICOR handled the transaction.
At closing, the 24,903 SF business park had one 4,000 SF vacancy. Existing tenants include, KG's Westside Cafe, Bellazza Salon, Northwest Hospital, and High Point Scientific.
For more info email firstname.lastname@example.org
Something to watch. We have a very limited housing supply. I believe this is mostly because the millennial generation recently jumped into the housing market so now we have the millennials AND baby boomers AND those in between are active in the housing market. Supply will become more available as the baby boomer generation ages. Values of housing may drop substantially as baby boomers exit the housing market and millennials fail to reproduce like previous generations.
Photo is 12 Acres of the remaining Tucson Airport Commerce Center industrial land ($1,830,000) listed by Rob Glaser and Max Fisher of Cushman & Wakefield | PICOR. Other parcels are owned or leased by Chamberlain (Liftmaster), Eastgroup, Custom Back Office Solutions, Diamond Ventures, LKQ, Walmart, DR Horton, Intuit, and Keystone.
Max Fisher and Molly Gilbert of Cushman & Wakefield | PICOR Represented the buyer
Dave Volk and Bruce Suppes represented the seller
for leasing details contact Mfisher@picor.com or 520-465-9989
Max Fisher, Industrial Properties Broker