New Mexico Retail Pauses, But Should Return After COVID-19
By George Chronis, Senior Advisor, SVN/Walt Arnold Commercial Brokerage
New Mexico retail has been negatively impacted by the state’s stay-at-home order due to the coronavirus. The retail industry was looking pretty promising with robust sales and leasing activity in 2019 and at the beginning of 2020 – New Mexico included. I thought we were off to a good start with several developments near completion, several in progress and several more to begin in 2020. The full economic impact of shuttering our economy for two months or more won’t be known for quite some time. General retail, gyms, restaurants and soft good retailers have been hit the hardest.
I have recently consulted with landlords, tenants and developers who have active projects throughout the state. Developers and landlords in the Permian Basin have been hit especially hard by a double whammy. This includes New Mexico’s stay-at-home order, which was compounded by lower global demand for crude oil and the price war between Saudi Arabia and Russia.
We shall see who emerges and reopens for business when the stay-at-home order is lifted. There will be some opportunities to expand for those who still have strong financial positions after all this passes. Many landlords and tenants have worked out deals to defer rent with lend-extend amendments to existing leases. I advise tenants to reach out to their landlords to discuss options if business has been negatively affected by the coronavirus to the point where they may not be able to pay rent. I also urge landlords to be open and listen to tenants as they work out a deal. It is always a good practice to try to keep strong tenants with solid lease histories at your property.
I am optimistic we will have some pent-up demand once we fully reopen our economy. Hopefully we’ll want to get on with our lives and pick up where we left off prior to the pandemic. I also believe there is still some momentum left from before the shutdown began. My peers and experience on my own projects tell me there will be a fair amount of business happening in 2020. However, I don’t want to give you a false sense that everything is great. I have had a few active deals negatively impacted by the coronavirus. About one-third have been put on hold or extended, and a few have been completely cancelled. I do believe this is temporary, and in a year’s time it will be back to business as usual.