RENO, Nev. — After months of stay-at-home orders due to the coronavirus pandemic, many states, including Nevada, are gradually loosening their restrictions and allowing more and more businesses to reopen.
The post-COVID “new normal,” however, is bound to be anything but ordinary for businesses and consumers alike.
With that in mind, the NNBW recently spoke with Dan Oster, a commercial real estate broker at NAI Alliance and adjunct professor at the Graduate School of Business at the University of Nevada, Reno, about the shifts, big and small, headed Northern Nevada's way in the age of the coronavirus.
Q: How will the pandemic impact the region's supply chain going forward?
Dan Oster: One of the challenges with supply chain shocks are unexpected events. And COVID was certainly one of those unexpected events. When we walked into stores and saw that the shelves were empty for the first time in 20 or 30 years, it was really jarring. In many respects, non-perishable items like toilet paper or cleaning spray — that kind of stuff that was out initially — I think that those supply chains have been able to flex and meet the new demand.
I'm much more concerned about the perishable items — what we call the ‘cold chain.' Anything that had to be refrigerated from the beginning of its trip in the supply chain — when it came out of the field and into the factory and into the store and into your house — that's the cold chain. And it is much more susceptible to shocks. It is much more intolerant of delay. Those are areas where I think we're going to see much more disruption.
Q: What might come from that disruption?
Oster: I don't think we're going to have people starving, but what I think we're going to have to come to terms with is the endless variety and selection and convenience that we have grown so accustomed to over the last 20 to 30 years is going to be what's disrupted. I used to be able to walk into the grocery store and select between not just chicken, beef or pork, but 10 different cuts of each. There just won't be as much variety of everything for a while.
Q: How do you think commercial real estate will be impacted by possible changes in consumer behavior?
Oster: The shift away from people going to pick up their commodity goods at retail bulk stores, I think, is going to be affected long-term by this COVID experience. A lot more people have tried online delivery; a lot of people have gone to more automatic subscription-based food delivery or other commodities that are going to be delivered routinely to their house. I think that was — pre-COVID — a convenience factor.
And now that there's real fear about going out in the public, I think a lot of people that are anxious about COVID, it's a real natural transition to say, hey, I'm just going to start having a lot more things delivered to my house, and I think we're all seeing that. And that, over time, will really start to affect the real estate landscape. So, you're going to see fewer malls and fewer retail centers being built.
But then you'll also see the make-up of existing malls and retail centers start to change. Rather than going there to pick up your routine retail goods, you're going to continue to see a shift toward more experiential retail. So, that's where we see gyms, trampoline parks, arcades, bowling — that experiential retail will back-fill a lot of what used to be going to the retail centers to buy goods.
Q: With Northern Nevada being a distribution hub, do you see more factories and warehouses coming out of this?
Oster: I do. And I think there are warehouses, generally, but within warehouses there's distribution/fulfillment. And that was a trend that was already underway before COVID, but it's going to be accelerated. Now, there's even a small segment of the warehouse sector that we call ‘last mile.' Certain companies, like Amazon, for instance, are trying to solve this last-mile problem: How to get it from the warehouse into the customer's hand as fast as possible?
Amazon, for the last 5 years, has been pioneering a hybrid between Uber, gig workers, using their own vehicle, and (Amazon) Prime delivery. A private citizen using their own vehicle will qualify with Amazon to be an employee. They go on the app and say, ‘I want to work for this two-hour block.' It says, ‘OK, show up at the warehouse.' They show up in their vehicle at the warehouse and an order and a route for delivery is already prepared for them. They put those goods in their vehicle and they, as a private contractor, go out and make those deliveries. I see that model spreading.
Q: Do you have any final thoughts on where our region is headed after COVID?
Oster: When it comes to emerging from this COVID crisis, if I were going to pick anywhere in the world to live it would be the United States. And if I were going to pick anywhere in the United States to live it would be Nevada — the economic growth and the factors going on here are really positive going forward. And if I were to pick a place in Nevada to live, I would pick Northern Nevada. So, I think we're in really one of the best places in the world to emerge from the COVID experience better than we went into it.
Editor's note: This interview has been edited and condensed for clarity.