Retail sales activity surged in the first quarter of 2021, as focus on coordinated vaccine distribution and supporting strong consumer confidence bolstered leasing activity and overall economic growth. While e-commerce continues to expand, consumers have continued to visit physical stores for both their basic needs and discretionary purchases. Pockets of strength in the retail industry include discounters such as Dollar General, Dollar Tree, TJ Maxx, and Ross Dress for Less; general merchandisers such as Target and Walmart; pharmacies such as Walgreens; pet stores; and home improvement/tool retailers.
While these essential-oriented tenant types remain a positive source of demand, several areas of the retail sector remain under financial strain. Ongoing capacity restraints for service-oriented retailers such as restaurants, together with reduced foot traffic for various indoor malls and retailer, continues to contribute to both bankruptcies and store closure announcements particularly concentrated throughout the restaurant, apparel and department store subtypes. High-quality properties with strong tenant mixes and essential-oriented anchors, in central location and growing demographics continue to trade.
At March 31, 2021, national retail vacancy rates stayed the same at 5.1% while our market areas reflected the following vacancy levels: Springfield, Mo. at 3.7%, St. Louis at 4.9%, Kansas City at 5.7%, Minneapolis at 3.7%, Tulsa, Okla. at 3.7%, Dallas-Fort Worth at 6.2%, Chicago at 6.1%, Atlanta at 5.4% and Denver at 5.3%.
The unprecedented rise in online shopping and quick delivery demands brought on by the pandemic have propelled industrial demand to all-time highs.
Leasing activity in the industrial sector improved throughout the first quarter of 2021, primarily led by commitments from Amazon, power-grocers Walmart and Target, smaller healthcare and medical-oriented supply companies, food and beverage producers and manufacturers.
Strong demand from a wide variety of business types and segments was enough to offset new supply and decrease vacancy rates. Persistent demand from e-commerce and third-party logistics (3PLs) companies continues to drive demand. Investors continue to aggressively pursue industrial acquisitions.
At March 31, 2021, national industrial vacancy rates decreased slightly to 5.5% while our market areas reflected the following vacancy levels: Springfield, Mo. at 2.1%, St. Louis at 4.6%, Kansas City at 5.2%, Minneapolis at 4.0%, Tulsa, Okla. at 3.9%, Dallas-Fort Worth at 6.9%, Chicago at 6.2%, Atlanta at 4.7% and Denver at 6.9%.
Our management will continue to monitor regional, national, and global economic indicators such as unemployment, GDP, housing starts and prices, commercial real estate occupancy, absorption and rental rates, as these could significantly affect customers in each of our market areas.
COVID-19 Impact to Our Business and Response
Great Southern is actively monitoring and responding to the effects of the COVID-19 pandemic, including the administration of vaccines in its local markets. As always, the health, safety and well-being of our customers, associates and communities, while maintaining uninterrupted service, are the Company’s top priorities. Centers for Disease Control and Prevention (CDC) guidelines, as well as directives from federal, state and local officials, are being closely followed to make informed operational decisions.
The Company continues to work diligently with its nearly 1,200 associates to enforce the most current health, hygiene and social distancing practices. A significant number of non-frontline associates continue to work from home. Teams in nearly every operational department have been split, with part of each team working at an off-site disaster recovery facility to promote social distancing and to avoid service disruptions. To date, there have been no service disruptions or reductions in staffing. With the advent of COVID-19 vaccinations in the Company’s markets, plans are being considered to allow associates working from home or other sites to return to their normal workplace in the third quarter of 2021, dependent on health and safety conditions.
Taking care of customers and providing uninterrupted access to services are top priorities. As always, customers can conduct their banking business using the banking center network, online and mobile banking services, ATMs, Telephone Banking, and online account opening services. As health conditions in local markets dictate, Great Southern banking center lobbies are open following social distancing and health protocols. Great Southern continues to work with customers experiencing hardships caused by the pandemic. As a resource to customers, a COVID-19 information center has been made available on the Company’s website, www.GreatSouthernBank.com. General information about the Company’s pandemic response, how to receive assistance, and how to avoid COVID-19 scams and fraud are included.