Amid slow vaccine rollout, will retail real estate in Reno-Sparks see return to ‘normal’ by the summer?

Like many people who found themselves stuck at home in 2020, Kelly Bland used the time to knock out a host of home improvement projects. Bland, senior vice president and principal with NAI Alliance’s retail properties group, joined countless Americans who’ve helped increase sales at national home improvement retailers such as Home Depot and Lowe’s.

“Those stores have been doing really well during the pandemic,” Bland told NNBW during a recent telephone interview. “I had a very productive 2020 when it comes to home improvement. I can attest to spending an inordinate amount of money on projects around my house.”

The ongoing coronavirus pandemic has battered certain segments of the retail industry — bars, restaurants, entertainment venues — while other segments have seen sales explode.

Large wholesalers like Costco and Sam’s Club, along with home improvement chains, reported strong increases in sales in 2020. Costco’s net sales for the fiscal year ending August 30 were $163.22 billion, up just under 10% from the prior year.

Online sales at the retail giant spiked nearly 50% in that time as well. Home Depot, meanwhile, reported a rise of nearly 25% in U.S. sales for the third quarter of fiscal 2020.

Regionally, most subcategories of the retail industry have been affected severely throughout 2020, and it remains to be seen how long the pandemic will continue its stranglehold on the sector.

Kelly Bland is senior vice president and principal with NAI Alliance’s retail properties group.

“Hopefully in 2021 we will get back to some semblance of normalcy,” Bland said. “People want to get back together and socialize. Entertainment venues like movie theaters will pick up steam this year — there are a number of blockbuster movies (scheduled to be released). It should be a good year for seeing movies at the theater.”

However, Bland noted, much depends on how quickly Northern Nevadans can receive the coronavirus vaccine — and rollout in Nevada and elsewhere has been significantly slower than anticipated.

“It’s kind of a moving target right now, but my guess would be somewhere between May and June, and on the outside July, before most people have an opportunity to get the vaccine,” Bland said. “So the middle of the year and on will be a very good time for people to begin doing a lot of the things they haven’t been able to do for a long time. There’s going to be some pent-up demand, and socializing, shopping and getting out will be a part of that.”

Shifting trends for 2021

Throughout 2020, retail strategies shifted focus as they navigated the uncharted waters of the pandemic.

Prior to the pandemic, said Casey Scott, associate vice president with the retail group at Colliers International, retail was focused on “internet-resistance,” or retailers that could withstand a continued transition to online commerce. These businesses include places where people gather — Dave and Buster’s, for instance — as well as gyms and entertainment venues.

Most of those plans were put on hold the past nine months, but they are starting to stir again, and retailers are jockeying for position, Scott said.

“Those brands are coming back and teeing up deals that may take six or nine months to complete. They are staging to be ready for the recovery, which will be strong as long as (the pandemic) doesn’t continue.”

Casey Scott is associate vice president with the retail group at Colliers International in Reno.

Another trend expected to continue throughout 2021 is the proliferation of fast-service restaurants with drive-through operations. Anyone who waited in long queues for a drink at Dutch Bros or meal from In-N-Out Burger these past several months can attest to the popularity of drive-through concepts.

Roxanne Stevenson, senior vice president of Colliers’ retail group, said many quick-service retailers are searching for places to expand in Greater Reno-Sparks. Some, Scott added, are likely to roll out new concepts that don’t even offer indoor dining spaces.

Both brokers agree the pandemic brought into focus new opportunities and accelerated trends that were already in motion prior to the pandemic. The explosion of ecommerce is nothing new, but grocers were quick to capitalize on new avenues of shopping such as home delivery and curbside pickup.

“That was already happening, but it was accelerated,” Stevenson said. “Some closures got sped up as well with tenants that were over-leveraged or had some other issue.”

“Companies that were able to rapidly adapt to delivery have done really well,” Scott added. “There’s a segment of people that probably would never have had groceries delivered to their house, but the option was kind of forced on them and once they tried it, they adopted it.”

Renewed interest in retail property sales

Sales of retail properties, meanwhile, have started to rebound after softening for most of 2020. Sales lagged after the initial wave of state-mandated closures since it was impossible to underwrite the rental income generated from cash-strapped tenants.

Roxanne Stevenson is senior vice president of Colliers International Reno's retail group.

Investors, however, have cautiously been dipping their toes back into the pond.

“It was hard to underwrite a shopping center in terms of what the income was, but now we are seeing renewed interest,” Stevenson said. “People have money they have been sitting on, and there’s a lot of (1031) exchange money from California. I am seeing much more interest.”

The pandemic also created closer relations between landlords and tenants, Stevenson added. Landlords have worked more closely with tenants to help them keep their businesses open and have offered assistance such as rent abatements, rent relief or provided areas for curbside pickup.

Despite retail’s struggles, Northern Nevada businesses are primed for success since the region has by and large weathered the brunt of the storm.

“We will continue to have a strong economy here (in Northern Nevada),” NAI Alliance’s Bland said. “We continue to have strong migration from California — that’s proved with residential housing sales. Job growth will continue, and retail dollars always follow residential development and job creation. As long as we stay strong on those, retail sales will be strong as well.”


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