Market & Feasibility Advisors, LLC

USA - Change Coming to the Whole World of Real Estate & Leisure Time Facilities

Dan Martin, Host of the NextGen Waterfronts podcast on ASPN, lays out the potential consequences of our fast changing world in the age of COVID-19. This wide-ranging prognostication extends beyond coastal issues to address a broader context faced by all Americans. Well worth the read

1. The Healthcare Sector 

A medical revolution and a reckoning are coming. 

First the reckoning across many healthcare facilities. Already tough balance sheets, paradoxically at both inner-city communities and rural hospitals, were aggravated by Covid-19. Closures and forced sales may leave many communities underserved. 

Medical group practices are consolidating further resulting in excess medical real estate. 

Pharmacies are becoming medical facilities. Many have added immediate care facilities and are exploring adding medical testing. Their immediate care facilities will likely morph into telemedicine hubs and become the leading inoculators in society. Most of this fall’s likely record number of flu shots and Covid-19 vaccines to follow will be administered from pharmacies. The leading chains may consolidate and require larger footprints for expanded drive-through services - just in time. They’re threatened in their core business by the rise of med home delivery. 

The coming revolution is fundamental. Personal technology, from wearable devices that collect and report data from our bodies to the expansion of telemedicine where we’re told what the data means will change a lot. Telemedicine is good for general consultation, routing to diagnostic testing and the routine long term follow up of chronic diseases. But this likely leads to fewer office visits and the need for fewer medical office building spaces - including exam rooms, check-in areas and related parking. Some physical exams will still require office visits, especially for consultation after positive test results. 

Telemedicine will still support the many standalone facilities that have populated strip centers in recent years and may boost their business as less testing will be done in hospital and hospital adjacent medical office buildings. This includes physical therapy, MRIs, proton therapy, dialysis treatment and others. 

The personal tech will lead to new approaches that analyze the personal data flows will evolve. The need for nurses and techs may drop, or possibly change how and where they work. With data available anywhere, they may be new candidates for Work from Home (WFH). 

Overall, medical performance metrics will be easier to track with telemedicine. The Covid-19 experience, as noted recently in the New York Times, is already raising questions as many have skipped health care and they seem, in general, to be fine. This could reflect an overuse by some of medical services, the positive impact of all of our family time, the reality of people sheltered from lives that include accidents of all types or, more likely, some combination of them all. 

This tech-driven future could lead to healthier lives from rural areas to cities. The rollout could be years, not decades. While the digital divide may keep this future from many, the 5G rollout and support for digital households for education and job training may bring it all home. With so much personal 

information roaming digitally around systems, privacy issues may rise. Efforts for national healthcare may be empowered and we may end up better prepared for the next pandemic with better personal health databases and safer healthcare service delivery. 

2. Hotels & Resorts 

Location equals proximity to key business-lines or market segments. This year it matters more than ever for hotels and resorts. 

Interstate hotels are doing reasonably well as their target market segment, intercity travel car travel, is lower but still moving these days. When flying ramps up, the roadside business will continue and airport hotels will reawaken with better performance, though the larger ones may not fill up for months. 

Downtown hotels, especially large ones with meeting and event space, aren’t doing well as urban tourism is down, offices closed and the meetings and events market has collapsed. Recovery will come first to the small flagged ones. It simply takes less to fill them. Downtown businesses are reopening, though at lower personnel levels and digital meetings have overtaken some of the need for business travel. Events, including conventions are likely to miss the fourth quarter but will be back next year after widespread deployment of a vaccine. Urban tourism is likely to miss the critical fourth quarter and may not be back until next year. The magnets of shopping, restaurants, museums and shows just aren’t back yet. 

Convention hotels, typically large and downtown, draw best in fall and spring, will suffer at least through next spring. Most late spring 2020 conventions were cancelled as have many fall ones have been already. Some of the spring ones went virtual, and went surprisingly well. Good for the meetings but not for the hotels. Without a widely distributed vaccine, spring 2021 conventions might topple too, but those cancellations won’t happen, if they do, until late this year or early next. 

Resorts are a varied lot. All resorts have magnets that draw people and business for getaways, vacations, events and meetings but differ widely in location and leisure assets or magnets. Plus, resort, unless for an event or meeting, is really optional. Mid-market resorts will be hit hard by the national decline in household income. Seasonality, location, settings and state regulations make a difference too. 

Depending on local weather, locations can operate from one or two to four seasons. Some have already lost spring and part of summer. The loss of a key season can be critical. Southern resorts on the coast or with large resort pool complexes, think some of the grand ones in Arizona or near San Antonio, operate most of the year right through hot summers. Those ones have already have lost revenue for the year. Excepting ski resorts, which can operate year-round these days, northern beach resorts really just have summer and some of fall. In some states, they may lose both due to restrictions. 

Beach properties or ones with those large resort pool complexes that are, at many resorts, really waterparks, will do well for the rest of the year. Word has gotten around that Covid-19 apparently doesn’t transmit through treated pool water. We’ve already seen that people think the beaches are just fine. Some perceptually family destinations, that are trending towards adult destinations, like the 16,000 condo Outer Banks, have done well in September and even October for years, when the kids are back in school. They’ve extended their seasons and may do well this fall. 

But it is still wise to take precautions in these environments. While Orlando might strike out with the lower attraction capacity at Disney, Universal and Sea World, it has a dozen resort properties with those extensive pool complexes. Still, Florida is hitting peak Covid-19 just as east coast schools have finished for the year. The Midwest is mostly out now. Not good timing for Florida to draw either flow of family business – one that tolerates the higher heat and humidity. 

Across the country in Las Vegas, reduced casino capacity may hamper room sales, but there is some gaming revenue to be had. It can be tough to bet against a casino. 

Households that took an economic hit will likely eliminate trips, and settle for staycations around home, or take a step or two down to less expensive lodging, likely roadside hotels in resort destinations to enjoy the areas attractions while paying less for rooms. 

Well capitalized golf resorts could take the downtime to add a resort pool complex with an adult tilt, if they don’t have them - to diversify appeal. Golf participation has dropped to 7% from 15 - 17% back in 2000 and an uptick is not in sight - while 21% of Americans still head for the beach each year. 

The over 100 Native American resort casinos outside metro areas, should consider adding indoor or outdoor pool complexes that target adults as well as good quality RV parks. RV travel is currently having a big moment and will be strong next season too. Indoor waterparks are seasonless, so they work year-round in hot southern states and cold-in-the-winter northern ones too. There are a few good adult friendly indoor waterparks that have been built. Adult targeted ones have been popular overseas for years. Northern beach resorts can add a season of business with an indoor waterpark too. There’s a good all-ages one at Marriott’s Nashville Gaylord Opryland to review – though they don’t have to be as costly as that one to work. Some northeastern ski resorts added indoor waterparks to extend their seasons years ago. 

Most years, upscale urban hotels have been seen as resorts for shopping, museums, dinner and a show. This year that package is a fail. In contrast, upscale beach and great pool vacations may be strong, but they will lose many of their events. 

Beach Airbnbs and VRBOs near beaches are likely to have decent summers as people believe they can control their environments. 

By fall, for buyers, there may be bargains for urban Airbnb, VRBO units - and entire hotel properties - as some won’t be able to make it or work out deals with lenders. 

Urban destinations will be back, but it will take a vaccine and widespread innoculation. 

Amenities are changing too. Breakfast bars have disappeared as they are hard to safely maintain. Exercise rooms will get less use, mostly by the hard-core road warriors armed with packages of wipes. Pools, especially good ones (not the typical small rectangle) that are outdoors will still draw people. A lot of people with hotel points may try to use them up this summer – especially at upscale resorts that may take fewer points this year just to get the business. 

Overall, we want them back, as soon and safely as possible. The return of hotels will be good for the broader economy as hotels employ a lot of entry level skilled labor and deliver crucial taxes, especially in cities. 

3. Convention Centers & Trade Show Facilities 

The convention industry will shiver at the mention of 2020 for years to come. Most lost their late spring business and the public events that carry many through the summer. The fall doesn’t look much better as trade groups and companies adjust to virtual meetings of all types – some of which are working surprisingly well online. Neighboring hospitality businesses like hotels, restaurants, parking decks and shops are suffering with them. Many will close. 

As most businesses try to do what they ordinarily do – from their employee’s homes or are distracted by plans to migrate back to the office. They’re pennywise and less likely to send people out of town for conventions and meetings that won’t quickly turn into new business. The bonus for those that go to likely smaller conventions is that attendees are there to make a deal. 

Overall, a key factor will be the home States regs on number of attendees at an event. 

4. Enclosed Arenas 

Stripped of concerts, programs and sports teams (at all levels: high school, college, minor league and pro), arenas are generally closed through the fall and maybe next year. The owner of the famed Nassau Coliseum on Long Island just called it quits and is closing it. Most arenas are backed by public entities and were built with bonds, if they follow suit due to reduced tax collections, will a number of private and public arenas close for good? As with businesses near convention centers, all of the neighboring hospitality businesses like hotels, restaurants, parking decks and shops near arenas suffer along with them. Many will close. 

Overall, a key factor will be the home States regs on number of attendees at an event. 

5. Open Stadiums 

Also stripped of their concerts, programs and sports teams (high school, college, minor league and pro), stadiums, especially baseball ones that have lost much of the season, have little to do. It’s not looking good for soccer and football ones either. Many assume that TV revenues cover team operations, but many baseball team budgets get 40% of their revenue through tickets sales. TV is a bonus, but not full coverage. Neighboring hospitality like hotels, restaurants, parking decks and shops will suffer along with them and some will close. 

There have been some clever re-uses plans that work uniquely well for outdoor stadiums as being outdoors may be safer. Some have programmed concerts (with the white small group circles painted on the field) and even drive-in movies. Nationally broadcast concert events are being planned – as many already have large end zone screens but it’s doubtful this will cover debt payments or fully cover the cost of teams. 

Overall, a key factor will be the home States regs on number of attendees at an event. 

6. Amphitheaters 

Many canceled spring programs and, in states with strict social gathering regs, summer as well, Being outdoors makes them seem safer and some are programming concerts (with the white small group circles painted on the lawn area) and even movies at night. If they have covered seats, some will still offer seating but under an assigned seating social distancing plan. 

7. Indoor Live Theatres 

There may be efforts to open some theaters for concerts and other live performances in the coming months, largely in “open” states, but it’s hard to see how those can be economically successful as long as Covid-19 continues to spread and they need to operate at 50% or less occupancy. This is not a case where scarcity (few tickets) likely allows for higher prices. 

In the handful of cities with active theater scenes, theaters in good residential neighborhoods might actually be bought for their site and redeveloped as housing. 

8. Recreation 

Indoor vs. outdoor and open state vs. closed will matter for rec facilities as outdoor facilities, from pools to tennis courts, fields and walking paths will be popular this summer if a state is open and allows for its use. The challenge will come in the fall when it turns cold and people will have to consider whether to continue on in indoor health clubs, gyms and pools, most of which remain closed in many states. Equinox and Soul Cycle have re-opened their Texas facilities with appropriate spacing, cleaning and required on-line reservations. Equinox reports they are equaling their pre-COVID visitation, just spread out over the full day. Soul Cycle slots are booked days in advance. 

National and state parks are a bright spot with many open, though not all of the facilities therein are open. Might be a good time to strike deals with states to develop and open facilities in state parks for the post-Covid-19 era. 

Outdoor tournament complexes for baseball have already lost the year. Soccer and other field sports might still have a fall season. Watch for state guidance. 

9. Golf Courses 

In an increasing number of states golf is available once again although typically with some restrictions. As a recreational activity, golf participation has been on a long slide to about a 7% participation rate (from more than double that in 2000). The restrictions are not so onerous that many courses might make it through the year without a financially devastating loss of play – except in the states with the tightest of restrictions. Still research has shown that replacing all or nine-holes of golf in some golf communities with aquatic attractions and other recreational facilities can yield higher returns. 

10. Waterparks 

Waterparks and their public sector cousins, aquatic centers, vary with whether they are indoors or out and located in open or closed states. Illinois waterparks, for example, remain closed while Texas and Wisconsin ones are open. This includes large indoor waterpark hotels which are instituting stringent cleaning programs in their hotels and for the surfaces in the indoor waterpark. The water, as noted, is expected to be disinfecting. 

11. Cinemas 

People are increasingly getting their movie fixes on their devices as the industry continues to release films to on-demand, though at a slower rate than typically. 

Many cinemas are actually well suited for the Covid-19 era as they have, in recent years, introduced online ticket purchasing including assigned seating along with large recline-able seating. Cinemas can block out some seating to keep parties apart as an auditorium fills up. As cinemas were already far from full for all but peak show times on Thursday, Friday and Saturday, time shifting, as people have more scheduling freedom, may be possible. 

This doesn’t apply to older independent cinemas which have the older, tightly spaced, seating and don’t have online ticket purchasing and seat assignments. 

The challenge will be whether people feel safe. So far people are not showing up – even to low acceptable limits - but it’s hard to tell whether that’s concern about Covid-19 or lack of new film releases. In hot southern states, the business could pick up in the late summer if the film spigot is turned back on and all transactions go online. When northern states tire of their summer, they may head back to the cinemas in the cool to cold weather but will spend more time outdoors due to caution. 

Sadly, there may be an opportunity in buying cinemas. We probably don’t need as many multiplexes, even the updated ones, as we have and the cinema owners need the capital. The older cinemas with the tightly spaced seating may not recover – but note that they are often the driving entertainment force in small downtowns attractive for dining and small shops. Without the cinema, and likely underperforming local restaurants, a lot of small downtowns may suffer. 

12. Drive-in theaters 

Drive-ins movie theaters are really having a moment, and for the first time in years, new ones are being developed. Unfortunately, there aren’t enough of them to do a modern film release. Some of the new temp ones are in stadiums and on vacant land slated for development and even municipal parking lots. The number of drive-ins is measured in hundreds while cinema screens tens of thousands. With their BYO seating, they seem prescient, even though the idea is decades old. 

13. RV Parks 

Traveling by RV has prospered under the radar for years but is reaching new peak popularity. Prices are up for RV rentals, purchases and peer-to-peer deals. This year, western RV parks on the National Park 

routes are seeing their many annual European traveling visitors easily replaced by American families who want to avoid hotels but still visit the western National Parks. Next year, if the Americans and Europeans both return, business will be even better. 

As with the sudden rise of urban drive-in theaters, there are new opportunities for the development of new RV parks along interstates, in visitor destinations and near city destinations, especially near commuter rail stations. 

With fencing, stay limits and a few other requirements, they can be as good of a use as a hotel and actually can serve a higher-end market. Many RV’s today cost over $150K. 

14. Retail/Malls 

Longstanding obits for the death of malls may finally be coming true due to accelerated store closures - about 25,000 this year. Closures are resulting from poor asset management (retailers acquired, then squeezed), changing purchasing patterns in an older population and most Millennials not making much money), online shopping and simply a glut of retail space. 

Survivors include malls that are the strongest in their metro area and grocers, who have been having their moment as people have spent more on grocery food during Covid-19. 

More weak malls will fail and there are some good re-use ideas. But the fewer stronger ones will still prosper albeit with higher vacancies. Agile and flexible owners, willing to re-invest in malls as attractions will be needed. 

Delivery has taken Amazon to new heights but Wal-Mart, Target and others came along for the ride and actually increased their market share in the enlarged marketplace assuring us that Amazon won’t (completely) dominate. Stories of Amazon expansions should be balanced with the reality that Wal-Mart and Target already have a lot of real estate. 

Neighborhood strip centers, especially ones with multiple take-out and grocer anchors (where the grocer delivers), have good prospects as people are staying close to home. But those that depend on high arterial traffic counts will face long term decline as autonomous vehicles rise (exposure doesn’t matter if no one’s looking out the window). 

A generation of rebuilding Main St. retail with small businesses and local restaurants has seen a major setback with Covi-19 behaviors, but all is not lost. We lived through this together. We all collectively understand vacant storefronts and won’t be as concerned by them as we are grateful for what has survived. Local small business development programs and restaurant incubators will seed main streets in the post-Covid-19 world. The pattern of buying failed restaurants for cents on the dollar and trying again will rise again. 

A dark horse will be indoor farming, yes even in suburban downtowns. Disruptions in food chain logistics and long-term ag issues (droughts and aquifer depletions) will make hydroponically grown fresh foods, right in a community – especially in the Great Lakes region with 20% of the world’s surface fresh water more appealing. The Chicago area has seen some large (100,000+ SF) indoor farms producing and selling in the wholesale market failing. Smaller 5,000 to 10,000 square foot units, selling directly to the public at 

retail prices can capture more profit and invigorate suburban downtowns, especially ones with commuter stations. 

15. Office 

The great wrestling match between office work and Work-From-Home (WFH) has begun. In the background is white-collar job loss. Advocating for the return to the office are the many managers who don’t believe their people are working if they can’t see them and offices that thrive on casual interactions and long-term relationships including mentoring. Class A office space owners are upgrading HVAC filters, coming up with lower density plans, or more divided space plans, changing bathrooms and automating all points of entry to draw occupants back. Users of lower grades of office space are surprised at how well WFH turned out. Some are encouraging people to stay home, but with monitoring “productivity” software on their computers. An issue will be that these office workers aren’t always the ones with spacious homes and great WiFi. 

Single user suburban buildings will make a comeback as they will be easier places for companies to establish a new level of control, including safety, and may involve commuting advantages. 

For center city office space, early research indicates that commuting on public transit to the office is less dangerous that we might expect. But because of those expectations, the idea will have to be resold to workers. The “good” news is that except in just a few large cities, public transit has actually carried a relatively small percentage of office commuters. Traffic, now with more Uber and Lyft, will be back and possibly worse than before. 

Commuters will need to learn new behavioral norms for travel on both mass transit and in elevators. 

Even with more square-feet per employee, it’s likely that there will be a net loss of demand for office space, especially in the B and C categories. 

An idea explored a generation ago for shared office places in communities that people ordinarily commute from may make a comeback. If built near commuter station or on second stories of main street retail blocks, this could help main street retail revivals. 

16. Warehouses 

The supply chain has been growing as home delivery has added enormous complexity but efficiency is still the core value. Just like local post offices in cities, local depots for “last mile” transfers of boxes are increasingly needed. The truck traffic they bring won’t be popular (drones someday?) but they are looking for cavernous spaces that can be retrofitted with automated systems that are located near concentrations of where people live and work with good road grid access. Old K-Marts and vacant land (every city has some) are two good candidates. 

17. Industrial 

Reportedly, many US companies are planning on reshoring manufacturing from Asia and other offshore sites. Even with automation, sites near inexpensive trainable workforces and the national transportation 

rail and road grid would be key. Could be a boon for small cities in the Midwest. Rail has made a comeback, so rail access will be a positive. The reshoring of manufacturing may cause price increases, impacting CPI, as the advantage of low labor costs will disappear while domestic supply chain costs remain the same or potentially increase due to tariff policies. 

18. Residential 

In some ways the housing market is in better shape than we think. If we never built another unit, we could be okay as we have enough housing units. But, like arguments for any new retail over the last few decades, what we have is not where we need it - and it is not configured right. To wit, there are plenty of housing units in small and declined cities and metro suburbs that have fallen from favor. However, most of it doesn’t fit the 65% of US households that have just one or two people plus, the housing is not where the jobs are. 

We also have a new ownership model since the last recession. Fleets of single-family rental houses were plucked from foreclosure and other situations by companies that now manage and rent them. Communities with higher foreclosure rates from the great recession are likely to have the highest percentage. 

We’re also hearing a lot about people moving out of cities. This will work if they’re in the WFH sector or if not, if they can move to places offering jobs – or if they’re moving to affordable communities and retiring early. Retiring Californians have been retiring to cheaper states and buying better homes than they had - as Cal housing is so costly. 

Better housing and work have been motivators for moving for centuries. It’s almost 150 years since the Homestead Act. One of the underlying reasons for Texas’ incredible growth in recent decades has been the combination of large great houses for the money, thanks to the production builders there, and the low cost of operating businesses there. 

A few generations ago that was California’s secret sauce. Texas 29 million has passed Australia at 25.5 million and angling to top Canada’s 37.7 million. California, at 39.8 million, is a longer shot. 

People who expect a WFH life will want slightly different space configurations than as will the smaller households cited above. The second or third bedroom will be back in multifamily. 

The ongoing recession will reach higher paying middle and upper management jobs than the last two crises. Jobs losses there will have a negative impact on the ownership housing market likely to be felt later this and next year. With the likelihood of a long recovery, demand for purchases of new and existing housing is likely to shrink and demand for rental will grow. That could lead to larger for-sale inventories that don’t have buyers, even with good rates. 

Senior housing is still in demand, but primarily in the lower income categories where there is less or sometimes no money to be made – leaving quality developments to the non-profit market. But the idea of clustering seniors is under new scrutiny following Covid-19 catastrophes in nursing homes. Aging-in-place may gain as the new desire, if not norm. The challenge will be that the existing housing occupied by seniors is often too large and not adapted to senior’s needs. Larger homes already occupied by seniors 

may be made adaptable and house more than one senior, becoming group homes. Programs to keep seniors in place will make them and their communities safer in likely future health crises. 

Minneapolis’ stripping of single-family housing zoning from its neighborhoods isn’t yielding much change as yet, but still may. The idea of adding affordable units to single family lots may happen in other cities too. Chicago may legalize more coach house units. 


Dan Martin, a 21-year veteran and Vice President of Economics Research Associates (ERA), has directed more than 300 land use economics projects over the last 25 years and assisted on many others with Real Estate Research Corporation (RERC) and Cornerstone Development, as well as ERA. Projects include redevelopment strategies, feasibility studies, master plan economics, and economic impact studies.

Dan works directly with clients assisting them and their planning teams to determine the best mix of land uses at a site and to determine and project the market demand and financial outcomes for those specific land uses at the site over time. He also has worked on many renewal and repositioning strategies for existing developments and facilities. Dan’s work includes analyses for market segmentation, attendance and revenue by segment, seasonality, and other critical operating assumptions. He uses these assumptions to prepare and update operational pro formas and financial analyses to help clients make tough decisions and pursue capital.

Dan’s rich portfolio includes downtown and corridor plans, retail and hospitality feasibility, museums, zoos, theme parks, water parks, resorts, aquariums, destination retail developments, and public parks and recreation facilities in 30 states and provinces across North America and in Asia and the Middle East. This broad range of experience, across many types of facilities helps him work on both simple and complex developments at many different budget levels.

In addition, Dan has published extensively on real estate and commercial and cultural attractions, including articles in Fun World, Urban Land, and Planning and has addressed myriad conferences and professional meetings.

Dan is a native of Boston and a graduate of the University of Texas – Red McCombs School of Business in Austin, Texas and the Catholic University of America – School of Architecture and Planning in Washington, DC. He lives in the Chicago area with his wife and four children.


Dan Martin, Managing Principal

Market & Feasibility Advisors, LLC

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