Investing in Consumer-Focused Properties: What’s Next for Retail, Hospitality and Mixed-Use
- May 05, 2020
Property investors are assessing risks and opportunities as the U.S. begins to reopen parts of the economy that were shuttered by the response to COVID-19. This week, Commercial Property Executive hosted a 30-minute “Snap Session” webinar with Stuart Saft, practice group leader of Holland & Knight’s New York Real Estate Practice Group, to discuss what owners of consumer-focused properties—including retail, hospitality and mixed-use—need to know in the current environment.
The pandemic crisis temporarily closed retail properties across the country while leaving some 80 percent of hotel rooms vacant. Now, property owners need to think about liabilities as they prepare to welcome customers and guests again. A key issue will be whether liability protection for facility owners and operators will be included in the next stimulus package passed by Congress.
Otherwise, the various laws of each state will determine liabilities for a large panoply of potential risks arising from the virus itself as well as preparing the facilities to open their doors. “You could be operating a facility in California and then wind up getting involved in a class action being brought in Alabama and be in front of a hostile judge or jury,” said Saft. “So the issue of indemnification is very important.”
Saft pointed to some office building operators in Manhattan are putting tape down on the floors inside elevators, as well as in elevator hallways and lobbies, to reduce density and promote social distancing—a practice that could easily be applied in multistory hotels and malls.
But for the hospitality industry, the primary issue seems to be filling guestrooms. “Most hotel properties don’t need significant changes, because they’ve been in the business of providing sanitized rooms in their hotels for 50, 100 years,” Saft said. He expects the hotel industry to create some sort of bureau that will provide a standard seal of approval for cleanliness.
The bigger problem may be figuring out how to get customers safely to travel destinations such as New York City, Las Vegas and Orlando, Fla.—and that’s something the airlines, cruise industry and mass transportation operators need to work on.
Holland & Knight is among the large number of companies that sent employees home during the pandemic, but Saft doesn’t anticipate a significant long-term impact on the real estate market in New York. “There’s a very real synergy from people working together physically,” he said, noting that his 40-member team of attorneys and paralegals are eager to get back to the office.
Asked about issues faced by real estate owners looking to sell, Saft said it’s a buyer’s market, pointing out there are vacant storefronts across Manhattan that were previously renting for $5,000 per square foot. “But if you have the wherewithal to wait a couple of months, once we get past the worst of this, the market will recover, because the economy is fundamentally strong.”
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