Businesses continue to struggle amidst the coronavirus pandemic. Even as economies reopen, many companies may not recover from the fallout. Many experts believe the U.S. will see a record number of bankruptcies in 2020.
Experts anticipate several bankruptcies by companies with over $1 billion in debt and record numbers by companies with at least $100 million in debt. Many of these companies anticipate closing hundreds of retail locations. The commercial real estate industry may soon have large numbers of vacancies.
The impact on small and large businesses
Since the beginning of the pandemic, economists have warned of the dangers of closing the economy. Now, it looks like many of those fears are legitimate. In May, a group of academics wrote Congress saying they “anticipate that a significant fraction of viable small businesses will be forced to liquidate.” Economists at Harvard and the University of Illinois published a study claiming that over 100,000 businesses closed since the coronavirus escalation in March. Mark Zandi, a chief economist at Moody’s Analytics, anticipates that over 1 million micro firms (businesses with fewer than 10 employees) will likely close.
Companies already facing financial hardship with recent changes to consumer behavior face similar challenges. Hertz Rent-A-Car was already struggling to compete against ride-sharing services like Lyft before the shutdown began. Retail clothing chains J. Crew and Neiman Marcus did not adjust fast enough to online shopping preferences and face immense corporate debt. Even companies like 24 Hour Fitness, which declared bankruptcy in early June, will close 100 locations due exclusively to the pandemic.
In Florida, Governor Ron DeSantis recently extended the ban on residential evictions to July. This ruling is the second extension of the moratorium invoked in early April, and no longer includes commercial tenants. Commercial realtors in the Sunshine State might see record numbers of evictions and vacancies over the coming weeks.
Secure a claim with legal help
Commercial realtors concerned about the impending wave of bankruptcies can reach out to a local attorney familiar with Florida commercial real estate. A lawyer can help settle disputes with tenants, work with the bankruptcy courts and recommend legal protections for real estate firms.