Earlier this summer, it seemed like progress was finally being made on the coronavirus front. COVID-19 cases were down. Vaccinations were going strong. And things were finally starting to get back to normal, to the point where many people could finally leave the house without a mask in tow.
Then the delta variant took over, and over the past few weeks, it's caused a world of upheaval. Not only have COVID-19 cases spiked across the country, but the CDC was forced to walk back its spring mask-wearing guidelines and start recommending that all people, including the vaccinated, return to donning masks indoors in public places.
That guidance extends to retail establishments, which may now be forced to implement their own rules with regard to mask-wearing. Though some cities, like Los Angeles, have brought back mask mandates, in other parts of the country, it'll be up to individual business owners (at least for the time being) to decide what policies to enforce. And things could get ugly from there.
A potential hit
Enforcing masks could go both ways for retailers. On the one hand, some consumers may feel more comfortable shopping in person if masks are back on the table. Around this time last year, 32% of consumers were afraid to set foot in a mall for fear of contracting COVID-19, so enforcing masks could drive more business to retailers.
However, the opposite might happen. Some consumers may be so annoyed and frustrated by masking requirements that they stay out of stores and do their shopping online. That could hurt retailers at a time when they're attempting to recover financially from the blow the pandemic dealt them last year.
Of course, if the outbreak gets worse, the decision to enforce masking may not be left to individual businesses. Once a given city or state implements a mandate, retailers have to comply, as do customers. But that doesn't mean the news will sit well, and it's hard to know whether consumers will rebel in the form of making fewer purchases.
If new masking requirements do end up hurting retailers, it could spell trouble for real estate investors. In particular, mall REITs (real estate investment trusts) took a hit during the pandemic, especially in light of plunging foot traffic and the countless store closures that ensued. If retailers see their revenue decline due to masking requirements, to the point where they're driven out of business, malls could be left with vacancies to fill -- and missing rental revenue, which would need to be compensated for. The same thing could happen at shopping centers, which have also lost tenants.
The Millionacres bottom line
It's too soon to know whether mask-wearing will continue to be a recommendation versus an actual rule. Much will depend on the trajectory the pandemic takes in the coming weeks. But real estate investors should brace for the fact that masking requirements could set retailers back and prolong their much-needed recovery. If the opposite ends up happening and masking requirements work to retailers' advantage, investors will have that much more to be grateful for.