Editor’s Note: This article was written Dec. 4, 2020
COVID-19 caused major disruptions in the commercial markets with some benefiting and others struggling due to its effects on how companies do business. For lawn care and landscape companies that service commercial clients, paying attention to trends in commercial business sectors now takes on new importance. We talked to some experts on their forecasts for 2021 and what they expect to see happen in the various markets this year.
“At one end of the spectrum, the lodging sector isn’t doing very well at the moment because the pandemic has depressed travel,” says Karen Dynan, a professor of the practice of economics at Harvard University. “At the other end, we are hearing stories that the warehouses supporting e-commerce are thriving. Within retail, it really depends on the business. Grocery stores are very busy because so many people are eating at home, but there are other types of retail where customers are still staying away because of fear of the virus.”
Hospitality Industry Status
Hospitality-related industries including restaurants and hotels have been some of the hardest-hit commercial markets during the pandemic.
In Yelp’s most recent Economic Impact Report, 32,109 restaurants have experienced closures with 19,590 of those closures being permanent.
Meanwhile, 57,180 hotels are estimated to foreclose or close due to low current/projected demand without another COVID stimulus bill from Congress, according to the American Hotel & Lodging Association’s research.
“I think the 2021 outlook for the hospitality business really depends on vaccine progress,” Dynan says. “I’m not worried about consumer demand for hospitality services over the long run because people love eating out and traveling. But I don’t think that demand in these areas is going to really pick up until people feel safe going out, and that won’t happen until we have an effective vaccine with widespread take-up. I’m not a public health expert, but it’s looking more and more like that won’t happen until well into 2021.”
“I think the hospitality sector will recover fully, once the impact of the pandemic passed,” says Tracy Lentz, managing partner at Lentz Thompson Retirement Advisors. “But there may be permanent changes as to how some do business. That’s not always a bad thing, and fortunately, businesses are good at adapting and providing what its customers want and need.”
Commercial Office Spaces
Office spaces are another area that has been greatly impacted by the pandemic as it continues on. More companies are pushing back their return to the office dates from January 2021 to June 2021 currently.
According to a report by the National Association of Realtors, assuming that jobs in the information, financial activities, and professional and business services increase by 100,000 monthly, payroll employment in office-using industries will only fully recover by March 2022.
The West and Northwest regions have experienced the largest loss of office occupancy in 2020 Q2, while office vacancy rates rose in all regions, with the highest rates in the South and Midwest.
Dynan says it’s likely the pandemic will have a lasting impact on how businesses operate and there will probably be more remote workers moving forward and hybrid work models will be adopted as some important business activities are still best done in person.
“The trend toward remote office and administrative work was already building momentum, and now the COVID-19 shutdowns have moved it many years ahead,” Lentz says. “Overall, this is probably a good thing for many employees and industries. Less commute time, more family time, control of schedule…From what we are seeing, the overall productivity in most organizations seems to be very good, and from what I can tell, this may change the scope and dynamics of remote and office work from here forward.”
Similar to how COVID-19 has spurred on more frequent adoption of remote work, it has also caused businesses to pull the trigger on reorganizing, moving or downsizing plans they were considering prior to the pandemic.
“Figuring out the new business model will take some time, but it will probably involve some downsizing and that downsizing is likely to begin next year (2021),” Dynan says.
Expecting the Unexpected
Because forecasts are not set in stone many different things could happen to shift what’s going on in certain markets. Dynan and Lentz offer advice on how landscape companies can prepare for the future.
“With the health and economic outlook still quite uncertain, I think they need to stay flexible and be ready to adapt to changing conditions,” Dynan says. “They also should be focused on ways to keep their employees and customers feel safe.”
Lentz encourages companies to have cash reserves available to help navigate unforeseen challenges. He also suggests hiring and rewarding good employees are they are always your most valuable asset.
“Be willing to change and adapt your service model to what the market and your customer base needs or desires,” he says. “As hard as it is to do, especially when you are a small business owner, businesses need to be forward thinking, and try to adapt ahead of the economic curve. If I had one small piece of advice, I would advise businesses to start embracing the world of providing their services online or virtually. For example, I would say that having the ability for online billing services would be an area I would focus on if I was a landscape contractor. I know with my own commercial and residential properties I would like to see that service with the contractors we use.”
This article was published in the Jan/Feb issue of the magazine.
