Pain Spreads Wide in Retail and Hospitality

Originally published in Summer 2020 Issue by Shawn Moura, Ph.D., Trey Barrineau

The effects of the coronavirus hit these sectors earlier, faster and more deeply than other areas of commercial real estate.

Fears of contracting the coronavirus, government bans on public gatherings, mandatory closures of nonessential businesses and social distancing measures pose ongoing challenges to the retail and hospitality sectors. Many stores have been forced to temporarily close their doors in response to government mandates or in reaction to sharp declines in foot traffic.

The coronavirus crisis could also hasten the failure of retailers that are heavily indebted or have poor cash flow. The Wall Street Journal noted in March that junk-bond-rated retailers that are particularly reliant on Chinese imports are most vulnerable to the effects of the virus. Healthier retailers may eventually recoup some of their losses after the outbreak when consumers return to stores to satisfy pent-up demand for goods and services.

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