Signs of Life in the Hospitality and Real Estate Markets

Throughout the pandemic many areas of real estate have suffered under the myriad of lockdowns and capacity restrictions needed to slow the progression of the virus. Office, retail and hospitality have all been hit especially hard. Unlike its counterpart, office space, both hospitality and retail have been suffering from the mass reduction of foot traffic from lockdowns and the lack of disposable income as mass unemployment has flooded the county over the past year. 

In fact, many headlines have cited the pandemic as the end of retail as a whole. But, this claim is too hasty, especially with multiple effective vaccines now available to much of the general public and unemployment numbers stabilizing. Further evidence that retail isn’t on the ropes just yet comes from a recent study which shows more than 80% of the Gen Z population prefer shopping in person at brick and mortar stores rather than online. This emerging trend along younger generational lines means renewed hope for retail real estate and its investors.

Of course, while hope looks like it’s on the horizon that doesn’t mean we’re quite out of the woods yet, especially given that much of the US is still under lockdown and there’s been little to no lifting of travel restrictions. A proposed timeline for recovery of properties in the hospitality and retail industries was, and still is, uncertain. Herd immunity will take time to achieve and will likely occur in pockets across the country before it ecompasses the whole country, meaning further delays to large-scale travel. 

However, with many Americans facing prolonged periods spent indoors and unable to go out, there is a high amount of pent-up demand for traveling, in-person shopping and dining, all of which is great news to real estate investors in retail and hospitality. People across the country, and across age ranges, have been struggling with the lack of travel and other social activities. After nearly a year, the sustained inability to go out will encourage many to travel more, and news of vaccines will likely only further fuel that desire. Incentivized by cheap airfare and hotel rates, a lasting aftermath of the pandemic both domestically and globally, good news and a recovery could be on the horizon for hospitality real estate sooner than some may have thought.

While herd immunity is still a long way off, vaccines are already being administered already. Real estate investors will still need to be patient for a full recovery but would be wise to consider real estate investment options in retail and hospitality, for the growth they’re likely to bring when the pandemic ends and capitalize on the steep discounts in the market currently. As increasingly more people get access to life-saving vaccines, real estate investors can expect the long-awaited return to restaurants, travel and shopping.

When it comes to major market-changing events, like the pandemic, keeping a holistic, long term view is absolutely vital, otherwise you may easily be swept up in the inevitable panic-selling that accompanies uncertain times. This prolonged pandemic has been a true test of patience for real estate investors across asset classes. Even the most confident of investors have likely had their doubts along the way, as negative real estate investment viewpoints were widespread.  By focusing on concrete demand and keeping in mind the social nature of human beings, shrewd real estate investors will continue to be able to keep a clear head when making decisions about their portfolio. And for some retail investors, this has been a moment they’ve been waiting for, with some jumping on the slew of discounted deals coming onto the market. Despite the still uncertain recovery, the vaccine rollouts have been a much-needed boost to both consumer and real estate investor confidence in retail and hospitality.

About Ari Rastegar

Ari Rastegar, Founder and CEO of Rastegar Property Company, has established a reputation as a thought-leader in real estate with his innovative, technology-driven investment approach and strategies. Rastegar's real estate investments span 32 cities across eight states, and include vintage multifamily units, mixed-use complexes, storage facilities and more. Rastegar began his work in real estate investment in 2006 while still in law school, before eventually founding Rastegar Property Company in 2015. He specializes in recession-resilient real assets and multifamily real estate developments and has built portfolios designed to reduce risk and maximize capital appreciation potential. Known for his thought-provoking insight and no-nonsense delivery, Rastegar and his company are regularly featured in both national and local news outlets including GQ, Commercial Observer, The LA Times and the Austin American-Statesman. Rastegar is also a frequent contributor to prominent publications like The Wall Street Journal, Forbes, CBS and International Business Times. His first published book, The Gift of Failure, is planned for release in Spring 2021. Rastegar holds a bachelor’s degree from Texas A&M University, as well as, a Juris Doctorate degree from St. Mary’s University Law School. He became licensed to practice law in Texas in May of 2009. Rastegar is a longtime supporter of charitable organizations that give back to the community like the Central Austin food bank, the Maharishi Foundation, and Ronald McDonald House.

Rastegar Property Company is an Associate member of TEXPERS. The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of Rastegar Property Company nor TEXPERS. Views are subject to change over time. Follow TEXPERS on FacebookTwitter, and LinkedIn for the latest news about the public pension industry in Texas.

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