After more than two months of shuttered storefronts, empty restaurants and deserted offices, Clark County is poised to take a very cautious initial step toward reopening its economy. Gov. Jay Inslee announced Tuesday that the county would soon be eligible to apply to move to “Phase 2” — a limited rollback of the state’s stay-at-home order.
It’s an eagerly awaited moment, but also a fraught one. COVID-19 remains a risk, and after two months of economic paralysis, a successful restart is anything but guaranteed. Businesses across the county’s economic sectors say they’re going to need help to return to normal — or as close as they can get in a world where the pandemic is still ongoing.
Some businesses have taken greater hits than others, but almost none are unaffected. In a recent survey of Clark County businesses, the Columbia River Economic Development Council found that 51 percent of businesses have been forced to temporarily close, and 95 percent saw drops in their revenue, with most of those reporting losses exceeding 50 percent.
Among surveyed businesses, various capital costs topped the list of their most pressing needs. Local businesses need money for rent, payroll, supplies, retraining, utilities, licensing, insurance, taxes — the list goes on.
“This isn’t a regular recession,” regional economist Scott Bailey said. “This is more like a natural disaster.”
A look at several sectors and how they are faring:
Construction contractors were granted a limited restart referred to as Phase 1 in April, but only on existing projects. Phase 2 will allow work to begin on new projects, and Avaly Scarpelli, executive director of the Building Industry Association of Clark County, said that’s the industry’s most pressing need right now.
Once construction has fully resumed, recovery will become an issue of money. The Building Industry Association’s statewide counterpart estimated that the construction industry lost $690 million in construction wages during the shutdown, Scarpelli said.
Elie Kassab, president of Vancouver-based Prestige Development, said the sector has also had to grapple with ongoing utility bills, as well as interest and loan payments for major projects.
“We all have expenses that do not stop,” he said. “Two or three or four months of delays could amount to hundreds of thousands of dollars for a project.”
Loans from the Paycheck Protection Program and the Small Business Administration provided a lifeline to many of the organization’s members, Scarpelli said, but builders will be looking for additional relief options such as property tax deferments or lease payment deferments as they try to get back to work.
The final ingredient for a successful restart will be the relaunch of other industries and an overall economic recovery, Scarpelli said. Even if the building industry can get the direct support it needs, its opportunities remain tied to the status of the broader economy.
“Our industry relies on consumer confidence,” she said, “and if people aren’t making money because they’re not working, people are not buying houses and they’re not doing remodels.”
Events and entertainment
The events and entertainment sector was one of the hardest hit by the pandemic, and it’s likely to experience an uneven reopening.
“When this first hit, it was shocking and devastating,” said Nanci Meadows, people champion at Vancouver-based Hubb, which makes event management software. “Everyone thought ‘This is the end. Our industry is events; events are over; we are over.’”
But the pandemic also turned out to be an opportunity because it caused a surge in demand for virtual events and online meetings, she said, and Hubb has been able to retool its software platform for virtual uses, adding features such as chat and video streaming.
The SharedWork program and a Paycheck Protection Program loan helped the company through the first few challenging weeks, she said, and now Hubb has started to think long-term again, contemplating a radically different future where virtual events become the new normal.
“When we say reopening and coming back, it’s dawning on all of us that whatever ‘normal’ was is likely not what normal will be, even well into the future,” she said.
For physical event and entertainment venues, the idea of reopening presents a host of challenges. The ilani casino announced last week that it will reopen Thursday, but most other venues will have to wait for Phases 3 or 4. Kassab owns the Battle Ground Cinema multiplex, and he said he’s hoping to reopen in late June or July.
Despite several prominent film release delays, there are still summer blockbusters on the way including “Tenet,” “Mulan” and “Wonder Woman,” which will hopefully draw in audiences for a successful theater relaunch, Kassab said. But there will be an added challenge in the form of stringent social distancing rules, making packed auditoriums a thing of the past.
The theater was able to obtain a Paycheck Protection Program loan, he said, as well as a deferral on several months of rent payments. But the closure is unprecedented, so the theater won’t know if it can achieve a successful relaunch until the reopening day rolls around.
“We’ll find out,” Kassab said.
Under Phase 2, restaurants and breweries may offer dine-in seating, which some owners expect to bring in enough revenue to rehire some of their furloughed workforce.
At Beaches Restaurant & Bar, one of the minority of restaurants that has stayed open for takeout since March, owner Mark Matthias is ready to return to dine-in service.
“I think it’s a good move for our industry,” he said.
Things will be different for customers, he said, and changes will be explained on a sign at the front entrance: Groups waiting for tables will be asked to walk away and come back instead of lingering near the entrance. The seating capacity will be limited to five people per group. And servers will be wearing masks.
“Not being able to see people’s faces smiling: That’s a big change,” he said.
Once Phase 2 is approved, Matthias said he expects to rehire about 60 to 70 percent of the Beaches workforce.
Matthias expects take-out service to continue into the future, and owners of many other restaurants he knows will keep take-out as a significant part of the business model moving forward.
Cleanliness will be also important moving forward, he said.
“Restaurants are already in that food safety mode. I think people are going to feel comfortable going into restaurants. I think they can be confident that they are a safe place.”
Restaurants will not be required to log customer’s information, according to Gov. Jay Inslee, who previously had announced that rule for dine-in service but has since rescinded it.
Hotels were permitted to stay open as essential businesses in Clark County, but many are looking forward to welcoming more guests as the state and county move forward in phased reopening.
Hotels like the Hilton Vancouver Washington are already seeing slow but steady occupancy growth, said Mike McLeod, general manager.
McLeod said a return to pre-coronavirus revenue might not be for another 12 months, if not longer.
“April appears to be lowest for occupancy. May is going to about double that,” he said. “They aren’t impressive numbers, but growth is growth.”
Once the stay-at-home order is lifted, McLeod anticipates a jump in hotel occupancy rates.
For the Hilton, which also has a convention center, revenue largely depends on when large events will return. That’s likely one of the last pandemic restrictions to be lifted, and it’s unknown when it will happen.
Hotels, like restaurants, will also be cleaner because of new procedures, McLeod said. In April, Hilton partnered with Lysol and the Mayo Clinic to develop those procedures. For example, Hilton will reduce paper products, and guests will find a notification that their hotel room was disinfected and no one has been inside since then.
McLeod also said he’s unsure if hotel room rates will change more than they already do from night-to-night or season-to-season.
Buffets are also going to be slow in returning to acceptable standards, he said.
“We’re building ourselves to weather the storm,” he said.
Much of the professional office sector has been able to adapt to the pandemic by shifting employees to a work-from-home model, but as Clark County approaches Phase 2, many office tenants are faced with a choice of going bigger or smaller, according to Eric Fuller, CEO of Vancouver commercial real estate firm Fuller Group.
Office tenants could opt to retain all or part of their new remote work configuration, resulting in fewer in-person staff and a need for less office space — or they could try to bring everyone back, creating a need for more office square footage to maintain proper social distancing between workers.
The decision to socially distance workers gets more complicated for bigger offices, he said.
“If you’re a larger tenant (with) 25,000 square feet or 100,000 square feet, you’ve got a much more methodical process,” he said.
Large-scale congregations are going to be discouraged in a post-coronavirus world, so office planners may end up shrinking the common areas to free up more square footage for working space, Fuller said — reversing a recent trend toward more open offices.
Retail is already allowed to provide online sales and curbside delivery, but when Phase 2 comes, shops such as Wild Fern in downtown Vancouver are preparing for in-store shopping.
“I expect to see a rush of people,” said Deanna Gaines, owner of Wild Fern.
Gaines said that once customers can come in and shop, they’ll be guided along a one-way path in the store to reduce the chance of exposure to the coronavirus. Staff will wear masks and regularly clean the store.
Gaines hopes that by opening before the fourth quarter holiday season, gift-buyers will make up for some of the lost revenue from the pandemic.
“Retailers are really counting on this holiday to pull everyone through for the year because we’ve lost so much money,” she said. “We need the holidays to be big.”
Retailers’ success will also depend on other parts of the economy restarting. John Creedon, president of Vancouver Ford and Hyundai, said car dealerships haven’t been able to take deliveries for the past two months, so they’ll be facing pent-up consumer demand without a full supply of the most popular models, making it imperative to get vehicle production pipelines back to full speed as fast as possible.
Retail has also been forced to adapt to a more online presence, and Wild Fern is one of the many to begin online sales during the pandemic. Gaines said her business plan moving forward will include online sales.
If not for the pandemic, Wild Fern, like many local businesses that stayed open, wouldn’t have spent efforts adapting to an online-focused business model, she said.
Not all retailers will survive. Pier 1 announced last week it will cease operations, closing 540 stores, including one in Vancouver. The commercial real estate sector is expecting to see a wave of new retail vacancies as the pandemic forces small businesses to close their doors, Fuller said.
“It will take years for retail to backfill the vacancies that didn’t survive,” he said.
Landlords will have to become more aggressive to find tenants for those spaces, Fuller said, but at the same time, they are probably going to be looking for stronger assurances that new business tenants will be able to succeed.
The pandemic experience is likely to turn business interruption insurance into a common prerequisite, he said, much like how a greater understanding of earthquake dangers in recent years have made earthquake insurance into a standard industry requirement.