Commercial Real Estate Still at a Premium
There is good news and bad news when it comes to the Newport commercial property market, depending on who you ask. However, property owners, real estate agents and business owners all agree that great uncertainty remains and setting a timeframe for a return to normal remains completely unpredictable for the industry.
Commercial property owners continue to lose tenants who couldn’t survive the pandemic. Steve Lewinstein, owner of properties in Long Wharf and Brick Market Place, has lost national chains like Brooks Brothers and Express, as well as local businesses like Cotton Candy, which closed after both owners tested positive for COVID-19.
“Even before the pandemic, many businesses were fighting against the Internet and Amazon, so that the pandemic was the last nail in the coffin,” said Lewinstein. “And without [additional] Money for the payroll program, the small businesses are really struggling to pay the rent and their employees. “
Amid all of these uncertainties, the commercial real estate market is hot, according to Steve Kirby, a local commercial real estate agent. The prices for commercial real estate have increased by around 15 percent, mainly due to a lack of inventory.
“Many homeowners have bought in previous downturns so they don’t have a lot of debt and can get through a lean period,” he said. “Therefore, there is very little going on in the market and the sales that are taking place are at an incredibly high price.
“With the buyers there is a residential component for the sale, e.g. B. a shop on the first floor and an apartment on the second floor. That’s why they pay more for the property because they use it as a residence. The interest rates are also low so you can afford to pay more. “
Despite corporate struggles, Kirby said vacancies are paramount for new tenants in prime locations.
“I am worried that we will have a shortage [vacancies for tenants]”He said.” The retail leasing season is between January 1 and St. Patrick’s Day, but if someone calls me looking for a decent location, it almost doesn’t exist. ”
The outlook isn’t so rosy for small business owners facing ongoing cash flow challenges as they try to stay afloat despite the many constraints. Jake Cathers, co-owner of Groovy Gator and Groove Newport on Thames Street, is waiting for a dark time for small business owners in the area.
“People made it through the vacation and made as much money as possible, but they know it can be really bleak until April,” he said. “I think there will be a number of closings over the next few weeks.”
Cathers weathered the storm in part due to flexible landlords willing to postpone rent last spring until business improved over the summer. “If that hadn’t been the case, we would have another conversation,” he said. “There would have been no way to keep things going if we were practically closed for three months.
“In Newport, business is very diverse. There are definitely retailers out there who survive and luckily have good landlords who will work with them, ”he said. “These companies are well founded and have been around for a while … they’re tough enough to get through this.”
As a landlord, Lewinstein works with both national chains and mom and pop companies. He has tried to be flexible with tenants who are “open and honest and show us their finances,” he said.
“The national chains are trying to toss their weight around saying they want to defer the rent by paying half now and half or asking for discounts for the next 12 to 18 months,” he said. “Smaller companies don’t have this leverage. But you want to help them stay in business because to me they are what makes Newport the charming place to be. Long Wharf shops have many national tenants, but I try very hard to keep a good number of local tenants. People don’t come to Newport for the national chains. “
Of course none of this is easy, said Lewinstein. “They’re trying to defer the rent, but the landlords have to pay mortgages,” he said. “There is only so much you can do … I go from seven in the morning to seven in the evening and take care of tenants.”
But despite all this, the arrival of a vaccine sheds light at the end of the tunnel. “January, February and March may be terrible,” Kirby said, “but there is a sense of optimism because people see the vaccine coming out and think they have made it this far, so they are not going to stop now.” because next summer could be one of the best that ever was. ”