Walt Disney (NYSE: DIS) has had a rough time because of COVID-19. Its massive West Coast theme park Disneyland in Anaheim, California, has been closed since March 14, and its East Coast park, Walt Disney World in Orlando, Florida, reopened with capacity restrictions in July. Because of this, the entertainment giant will be laying off 28,000 workers, mainly in these two main hubs. Most of the affected jobs are part-time positions, but some full-time employees are also being laid off.
Disney is a major contributor to the economy in both Orlando and Anaheim, and its reach extends far beyond the parks themselves. These locations host restaurants, hotels, shops, and other services that cater to tourists. Disney is also currently Central Florida's largest employer.
The employee factor
With a current median home listing price of $650,000, Anaheim may not be affordable for all park workers to buy a home there. There are only around 670 homes for sale in Anaheim as of early October 2020. Job cuts could have more of an impact on the rental market. The average rent for a studio apartment in Anaheim is currently $1,550, according to Zumper. This is a 9% decrease compared to last year.
In Orlando, the median listing price is $275,000, but currently over 5,100 homes are for sale and over 2,200 homes for rent. The average rent for a studio apartment in Orlando is currently $1,140, a 13% decrease compared to the previous year. In the meantime, leisure and hospitality jobs have dropped dramatically in the Orlando area. Universal Studios, which is owned by Comcast (NASDAQ: CMCSA), also has a nearby park and, similar to Disney, announced it's paring back its workforce in the area.
The short-term rental factor
Travel and tourism are obviously huge factors in both these markets. Theme park attendance at Disney World in Orlando was 20.96 million in 2019, with attendance at Disneyland in Anaheim at 18.6 million. Those numbers are expected to be much lower this year. Hotels have seen occupancy rates drop, and short-term rental and vacation home operators have been faced with vacancies.
While short-term rentals in the Orlando area have rebounded a bit, Anaheim's may not recover until Disneyland reopens. And both parks might have to close again if COVID-19 cases spike during the winter months.
"Disney layoffs will definitely impact our traditional, short-term, and vacation rental markets," says Nicole Mickle, an Orlando-based real estate agent. "A major part of our Orlando economy is structured around tourism. I do feel that our existing residential market is the strongest I have seen in my 24 years in the business. With record numbers relocating to the area and strong financial positioning, we have the highest demand for single-family homes."
One factor that may benefit Orlando is the New York-to-Florida migration. With only around 10% of office workers returning to their desks in Manhattan as of last month, there's more potential for people to seek warm-weather locations as they contemplate remaining out of the office. Florida's warmer weather also makes year-round outdoor dining a lot easier.
Similar factors are in play in Anaheim. While Anaheim's rental and home prices are relatively high, they are cheaper than Los Angeles and other surrounding areas. Some people may seek a more relaxed lifestyle in a popular vacation destination.
The bottom line
In both Anaheim and Orlando, it seems likely the real estate market won't be too heavily impacted for the long haul. However, rental operators may be forced to drop prices in the short term.