Here’s more reason for retail real estate investors to be cheered by the lifting last week of most COVID-19 pandemic restrictions in California: The Golden State accounts for about 13% of all shopping centers in America.
In fact, our three most populous states -- California, Florida, and Texas -- account for 27% of the nation’s 115,049 shopping centers, according to a new annual report from the International Council of Shopping Centers reported here by Chain Store Age.
Interestingly, as the article points out, the fourth- and fifth-most populous states, New York and Pennsylvania, are only number eight and nine on the list, which uses CoStar data and includes malls, power centers, strip malls, neighborhood centers, and mixed-use properties.
Here’s the top 10: California, 15,285; Texas, 12,834; Florida, 10,843; Georgia, 4,701; Illinois, 4,470; Ohio, 4,402; North Carolina, 4,132; Michigan, 3,853; New York, 3,524; and Pennsylvania, 2,914.
(The report’s landing page itself is pretty slick. Check it out here. You can click on a state and get details such as the number of retail real estate establishments, retail and food service jobs, and how much they changed year over year, as well as info on sales taxes.)
More people out and about = more business for more businesses
As this NBC article points out, Texas was among a group of states that loosened pandemic restrictions in March, while Florida did last September, and Georgia was one of the few that never imposed a mask mandate.
But California – and for that matter, New York – had significant restrictions that included capacity limits on restaurant and entertainment venues, as well as mask mandates.
Millionacres’ Maurie Backman points out here how lifting restrictions will help Empire State businesses of all kinds, and the same effect is true in California: movie theaters, hotels, restaurants, and conference and sporting venues can now begin welcoming more guests and customers. (Although in California, restrictions do remain for indoor events of more than 5,000 people or outdoor events of more than 10,000, according to the Los Angeles Times.)
All that -- along with a significant return to the office, if that materializes -- translates to more business for those businesses and for the shopping venues that either host or are part of the same commercial real estate neighborhood as all of these places.
The Millionacres bottom line
While shopping center anchors and some of their other most reliable tenants are often just the kinds of businesses that stayed open during the worst of the COVID-19 plague -- the Targets, Krogers and Walmarts of the world, for example -- there’s no doubt that retail real estate got hit hard the past 18 months. (Just ask investors in real estate investment trusts (REITs) that suspended dividends last year.)
Masks don’t keep people at home but capacity restrictions do, and lifting them may well hasten the economic recovery of these areas. From the real estate investment perspective, the fact that California has so many more doesn’t mean that an investment there is automatically a better one than an investment in, say, sparsely populated South Dakota.
Investors in individual properties need to assess each one within its individual market and context. Same thing with retail REITs. It’s always a good idea to take a look at their portfolios to gauge their individual promise and performance.
But when a massive presence like California swings open the doors to so many of its consumer-level business generators, that has an outsized impact from the national perspective, in terms of job creation and retention, tax revenue, investment performance, and so much more. It’s a milestone worth marking.