Palm Beach County Retail Market Resilient Despite COVID-19

The Palm Beach County retail market has felt the impact of the coronavirus, which has brought stores and restaurants to close in the second quarter.

These closures were intended to decrease the infection and death toll. Unlike Miami-Dade and Broward counties, Palm Beach has had significantly less COVID-19 cases and deaths, and has been able to get a head start on its road to recovery by opening earlier.

Central to the recovery to the retail market in Palm Beach was the Paycheck Protection Program and rent abatements from landlords to help them stay afloat. While some stores ultimately closed, countywide initiatives, such as “Palm Beach County: Stronger Together” campaigns have driven traffic to local businesses, according to a report by Colliers International.

Now, many businesses are relying on recent trends to help them survive the effects of the pandemic until there is a vaccine for the coronavirus. Colliers is expecting the vaccine to indirectly restore new construction activity and decrease the vacancy rate in the county.

In Palm Beach, the lease deals in the second quarter were in the works before the coronavirus outbreak, the report stated. These include new leases with over 58,000 square feet by Spirit Halloween in Royal Palm Beach and 13,000 square feet by Rooms to Go in Boca Raton.

The two largest sales transaction in the second quarter involved Walgreens buildings. in Delray Beach, it sold for $8.1 million or $564 per square foot, according to the report. While the second involved a Walgreens in North Palm Beach that sold for $6.9 million or $482 per square foot.

“For investors,” the report stated, “Walgreens is an attractive tenant and would be considered a safe investment with a stable, recurring cash flow, even in times of the pandemic.”

The Colliers International report predicted that retail centers with “essential” business tenants, such as grocery stores, are expected to perform well in the next couple of months. Meanwhile, experiential and entertainment-based retail will struggle.

Some of the trends that could help retail tenants have been the acceptance of new trends, such as contactless payments, curbside pickups and drive-thru models for in-store collections. These social distancing trends are a hedge against the traditional retail market operation.

For instance, restaurants have found success from Ghost Kitchens, which means offering delivery instead of relying on scaled back dining inside the restaurant to comply with social distancing safety measures.

A second trend that has driven sales is on-demand delivery. In April, online grocery sales for home delivery and store pickup climbed to a new record. The report stated that sales were $5.3 billion in 30 days, representing a nearly 40% increase within one month.