Retail Trends + Considerations: Part Three

ECONOMICS

Economic challenges for operators pre-COVID included high labor costs and a shortage of quality labor, as well as some of the highest construction pricing the City has experienced, especially for full-service restaurant buildouts. Today and beyond, operators will face additional challenges with staffing, an increase in pricing and potential shortage of goods, and pricing of construction remaining high or increasing due to delay of materials, work stoppages, and retrofits of existing spaces. With respect to deal structure, landlords and tenants will tighten partnerships moving forward – restructuring existing leases. New deals will have a rent reset from the pre-COVID market and alternative structures – such as a percentage rent component – as well as lease provisions around pandemics or unforeseen shutdowns in the future.

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