A local real-estate agent warned the coronavirus pandemic will likely be the fatal blow for many beach retailers already stressed by online competition, while short-term rental investors are finding themselves “with no money coming in.”
“I know of many businesses that are shutting down completely,” said Tony Franco of The Franco Realty Group, a commercial real estate retail and office broker specializing in Pacific, Ocean and Mission beaches, and the only firm representing the 92109 ZIP code. “Many businesses are getting grant money too – and it won’t be enough. Barbershops, hairdressers, massage parlors, smoke shops, clothing stores, gyms, restaurants, bars, and more nonessential businesses are being crushed.”
Noted Franco, “Co-working space was such a promising industry, and then was immediately crushed.”
There’s also a situation with unemployment insurance.
“Now many surviving business owners are burdened with unmotivated workers since individuals can collect just as much money from not working, if not more, for going on unemployment,” Franco said predicting, “Unemployment rates will never be the same again. Amazon was already a major blow to the retail industry and the COVID-19 virus is the knock-out punch.”
Franco offered another prediction.
“Unless government officials immediately open businesses back up, I doubt 50% will make it without some sort of relief from the landlord,” he said. “The sad part is the landlord does not get a break on their mortgage or from paying property taxes. For apartments, offices, and retail buildings, Pacific Beach should expect to see landlords contributing less money towards construction projects on their building, as they also struggle from not receiving their scheduled rent.”
Added Franco, “Vagrants have been breaking into many of the commercial buildings during the lockdown and vandalizing the spaces.”
A possible solution was also offered by Franco.
“In order to stimulate the economy and to prevent the spread of COVID-19, we need to loosen up on ABC restrictions. The Alcohol Beverage Control and local law enforcement officials should allow for more ABC licenses to come into PB. When restaurants are allowed to open for business again, health officials will probably require them to operate at half the seating capacity. Meanwhile, the population is continuing to grow in 92109. By allowing more restaurants to obtain ABC licenses, we can attract great operators and can keep everyone spread out.”
Regarding residential real estate, Franco noted: “What’s interesting is the number of folks who fraudulently bought houses saying it was their primary home on the loan application, and then turned it into a vacation rental. Now they have no money coming in. “I suspect a lot of houses coming to the market soon, or the long-term residential rental market loosening up, as short-term rentals convert back to long-term,” continued Franco. “There is still a high demand for homeownership, so the residential market won’t see an immediate drop in prices. As the unemployment rates continue to spike, we should see residential markets start to loosen.”
Added Franco: “If you do plan on taking out a mortgage and buying a home, then prepare for a delayed lending time. Banks are backed up and are not giving out bank statement loans anymore.”