The Boston Metro continued to grapple with pandemic-related disruptions during the second quarter of 2020. According to the latest Beige Book report from the Federal Reserve Bank of Boston, most industries have borne the challenges fairly well, but hospitality and retail sectors have taken the brunt of the loss.
Adaptability to social distancing has been the key to business survival. Less than half of regional full-service restaurants found takeout-only business models feasible or sustainable. For restaurants resuming on-site dining, social distancing means reducing dining room capacity, which in turn reduces profitability. Restaurants with buffet models are especially hard-hit, as the era of self-serve, open-air food displays seems all but over.
Travel industry respondents indicated an 80% loss in hotel room occupancy in the Greater Boston area. At the time of the Beige Book survey, Memorial Day weekend travel had not yet taken place. The third quarter of 2020 is expected to offer some improvement as pent-up consumers travel for summer vacations.
In a bright spot, most regional manufacturers saw little disruption in their operations. However, about half of them curtailed capital spending.
Commercial real estate activity in the Boston Metro and northeast region has been moving forward with caution. The Beige Book report shows that most commercial tenants honored their rent obligations in April. Tenants are seeking shorter terms in lease renewals as they face continued uncertainties. Meanwhile, some new development projects have been placed on hold as investors take a wait-and-see approach.
Overall, the Beige Book report points to the growing need for adaptability in business models and operations, and a tenant desire for flexibility in lease agreements. Proactive discussions between tenants and landlords should be encouraged as Boston Metro businesses move forward in changing times.
Professional guidance and tenant representation are essential these days. When you are ready to begin, relocate or expand your business, team up with the Jay Nuss Realty Group, LLC! Whether you are thinking of buying, leasing, or investing in Boston Metro commercial real estate, we can help you find the ideal property.
Contact us today for expert guidance!