Video Index (with direct links)
1:00 Schools, movie theaters and other businesses can open in California
2:14 May’s unemployment news and its effect on the stock market
3:49 PPP Flexibility Act passed. Get your PPP loan if you haven’t gotten one yet
4:36 Update on Senate Bill 939, with some good news
5:26 Nationwide rent collection statistics for malls and strip centers
6:14 April and May Retail sale data for Southern California, 2020 vs 2019
Did you know that the pandemic has caused a nationwide bike shortage? I went shopping but could only find one bike to buy. Check out the video to see me ride my new bike!
More businesses can open in California as soon as this coming Friday, June 12. These include schools, day camps, bars, gyms, campgrounds, professional sports, and family entertainment, including bowling alleys, arcades, and movie theaters. Nail salons are still not allowed to open.
When students return to classrooms in the fall, things could look very different. The state plans to supply every school and day care with infrared thermometers, hand sanitizer, face shields and masks. In addition, schools are asked to try to keep students 6 feet apart at all times. How will kids play tag??
And movie theaters can open, but only at 25% capacity, or with no more than 100 people in the audience. So we can look forward to going to the movies again, but Hollywood hasn’t announced new release dates for its upcoming blockbusters. I’m definitely looking forward to seeing the next Bond movie.
Last Friday, May’s unemployment numbers were released. And where almost every economist in the country was predicting more job losses in May, actually there were 2.5 million jobs gained. Many employers hired back the people that they laid off in March and April. The vast majority of May’s jobs gained were in food service. In April, restaurant employees lost 5.5 million positions, but in May 1.37mm of those jobs came back. In the retail sector, 367,000 jobs were added in May as many retail stores opened up again.
The stock market responded to the news with huge gains on Friday which continued through Monday. The Nasdaq actually hit a record high and the S&P was briefly in positive territory for 2020 on Monday before falling a bit on Tuesday. It’s crazy to think that although the stock market is at or near record highs, there are more people unemployed now than nearly other time in history, the economy is barely opened, and many Americans are still looking for another stimulus check to help them make rent.
The PPP Flexibility Act was signed into law last week, giving borrowers some breathing room in how they can use the funds. If you haven’t applied for a PPP loan yet, it’s not too late! Funding is still available, so talk to your local banker to complete an application.
Good news regarding Senate Bill 939. This bill has proposed to extend moratoriums on commercial evictions for a year after the emergency order ends, and allow some tenants to walk away from their leases with little to no penalty. This is very bad for property owners! The author of the bill, Senator Scott Wiener has publicly stated that he plans to modify the bill to shorten the length of the moratorium as well as eliminate the lease termination provision. The bill has been moved to a suspense file and will next be discussed at the June 18 Hearing. To continue to voice your opposition to this bill, please fill out this simple form at this web site. We’ve collectively sent over 32,000 emails to the state Senate, and it’s working!
A recent survey of members of the National Association of Real Estate Investment Trusts shows that rent collection rates in malls during the pandemic were only 20%. This is clearly hurt by many mall tenants recently declaring bankruptcy and closing stores, including J, Crew, Neiman Marcus and JC Penney. Costar reports that strip centers collected about 57% of rents in May and 65% in April.
I ran a survey to compare retail sales volume comparing April and May of this year versus last year for LA and the Inland Empire. Transactional activity was down by 48%, from 225 transactions down to 116 transactions. There were a higher percentage of owner user sales versus investment sales this year, which reflects the fact that many investors are waiting to see what happens with businesses after the pandemic. Also, there are a higher percentage of single tenant retail sales this year than there were last year.
New School Opening Guidelines: https://www.ocregister.com/2020/06/08/new-guidelines-say-school-year-will-see-some-california-students-learning-from-home/
May’s unemployment report and its impact on stock market
Modifications of SB939 to help landlords: