I hope that you and your loved ones are safe and healthy during this hard time for Americans and the rest of the world. I encourage you to remain strong, look past these immediate disruptions and see the world of opportunity brought by these unpleasant circumstances.
Yes, we are still dealing with COVID, a worldwide disaster that threatens to affect us into 2021, and while we do not have absolute control of this devastation, as with any challenge, tied shoulder to shoulder are great opportunities. Below are a few unique trends and characteristics of our new world created by this pandemic.
Lifestyle Changes
As a result of COVID, since March 2020 many service-based, professional employees have been working remotely. With the lockdowns earlier in the year, organizations had no choice but to send their employees home, where they could either work and add value or wait until allowed to return to the site. In an unprecedented manner, organizations have seen that many employees can work remotely at one time and operations can continue. In roles where the work does not need to occur on the site (services such as purchasing, marketing, engineering, etc.), it was a surprise to many organizations – many of which were resistant to the pleas of employees to work remotely – that business did not stop. Moreover, in many ways teams became more productive.
This is changing the way in which companies are doing business. Many are now more open than ever to allow employees to work remotely, if even part time. Even further, employees are expecting the ability to work remotely. They are building their lives around this freedom. This means they are moving. They no longer are confined to where they have to work, but now choose to live where they desire. As the trends show, many are moving out of the large cities and into secondary and tertiary markets. Game changer.
Repositioning of Business Models
With the loss of revenue from COVID impacts, many companies are forced to make cutbacks. Disney announced the layoff of 32,000 employees, a tragic announcement for the many dedicated supporters of the magical company. In addition to cutbacks, many organizations are choosing to refocus on their core competencies rather than expansion. For example, AirBnB recently decided to focus its efforts on its core short-term/vacation rental business, putting off its expansive attention to extending its business model. This shift inevitably means cut backs in work force and changes to major corporations’ geographic footprint. All of this translates into jobs being lost but new jobs created in key markets.
Succession
In nature, succession occurs when plants, woods or forests, formerly destroyed by fire or other natural circumstance, begin to grow and replace the former desolation. As with many phenomena, this process of rebuilding is observable in other places. If you ever had an ant problem, after having destroyed the ant hill, you may have noticed days later that they rebuilt just feet away from where they last were. Nature is resilient and so are economies. When one city, such as Detroit, loses jobs, that is an opportunity for more jobs to be eventually be created as a result of some sort of catalyst. Today and in the future, some cities, completely wiped out by the pandemic, will be prime for new opportunities to rebuild, attracting jobs, migration and growth.
Many are referring to the unique trend of mass migration to secondary and tertiary markets. This certainly is a change we will observe for years and many new cities will be on the map for high-growth and great places to live and work. There are without a doubt great opportunities in these high-growth cities. There are, however, wonderful opportunities for investors in cities such as Orlando, who took a massive hit from loss of retail and entertainment business, to revitalize. Orlando will always be an attraction for tourism, family entertainment and business, so while the city will be brought low in the near term, it will present great investment opportunities in during the same time.
Takeaway
As with any challenge, there are great opportunities. In the worst of devastation, there could be even greater and more special opportunities. Each of the above three characteristics presents opportunities for multi-family investors to seek out new high-growth emerging markets for investment. Robinson Capital and its partners seeks to find and pursue these opportunities for ourselves and our investors.
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