The W is Here

The W is Here

Update: 2020-07-17
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The much feared W shaped recovery is upon us. Attempts to open up the economy and to restart the floundering food and beverage industry have hit a snag. This past week saw a record number of new infections across multiple states in the US. There is understandably a degree of Covid-19 fatigue in the population. Summer is in full swing and people want to enjoy the outdoors. The question is how to do it safely?


The US recorded a stunning 130,000 new cases of Covid-19 over a two day period this week alone. Hotspots include the populous and economically important states of California, Florida, Arizona, Texas and Louisiana. Texas, California and Florida are all reporting record numbers of deaths so far in the pandemic.


In a world where scientific data seems to be politicized, it’s hard to get reliable data. In a world where economic data seems to be politicized, it’s hard to make sense of anything.


In a world where getting reliable data is increasingly difficult, several software as a service  companies can offer a window into what is happing in the economy. It seems that data often is presented with an agenda, or a narrative. On this show we aim to share data, mixed and confusing as it may be and allow you to draw your own conclusions.


OpenTable is used to reserve a table your favourite restaurant. I use it frequently when I travel. Data from OpenTable showed that people were venturing back out to restaurants at the end of May and early June as the economy reopened. But in the last few weeks, reservation bookings on the platform have slipped, especially in states that have rolled back reopening plans, such as Texas, Florida, and Georgia.


Homebase, a time scheduling and tracking software used mostly by small businesses, saw the number of hours worked plateau in the last week of June, which is likely to continue, according to data from the company.


The pace of improvement of businesses reopening and workers coming back in June slowed from a month earlier, according to Homebase's monthly report. In May, the number of employees working improved 37%, while in June, gains were only 6%.


In addition, Homebase is seeing declines in growth in states with higher COVID-19 cases, such Arizona, Florida, and Texas.


It’s unlikely that we will see a national shutdown like we saw in March. The appetite doesn’t seem to be there in the White House. It’s likely that we will see numerous state level and local shutdowns in hot spots as outbreaks flare up.


The slowdown in infections that was predicted during the warmer summer weather hasn’t materialized. In fact, we’re seeing quite the opposite.


Many school districts across North America are making plans for the upcoming school year. Some are opening two days a week. Some are going 100% online for the start of the school year. Others are opening fully with attempts to increase social distancing in the classrooms. The number of families where both parents work is going to be further impacted by the decisions made by school boards. Some families don’t have the luxury of finding child care.


So what does this all mean for real estate investors?


This is starting to feel like 2008 all over again. I’m seeing distressed properties coming on the market, below construction cost. In earlier months, properties like this would have been snapped up in hours. Now, they’re staying on the market for days before being snapped up.


If a deal meets our criteria we'll place an offer. Otherwise, we'll pass. There will be plenty of opportunity over the next couple of years. 

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The W is Here

The W is Here

Victor Menasce