my view

Post-pandemic: boom or bust?

By CHUCK PETERSHEIM
Posted 4/29/20

There is a conversation well underway about what the Catskills will look post-pandemic. Boom or bust?

Some people believe that, as soon as the stay-at-home restrictions are eased or lifted, …

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my view

Post-pandemic: boom or bust?

Posted

There is a conversation well underway about what the Catskills will look post-pandemic. Boom or bust?

Some people believe that, as soon as the stay-at-home restrictions are eased or lifted, economic life will emerge from its two-month hibernation and return to its strength prior to the outbreak. The desire to gather, spend and play will be immediate: a classic V-shaped recovery.

Some people think the same drivers that propelled the Catskills after 9/11 into 2005 are present again: feeling fear, revaluating lifestyles, wanting simplification. These goals are best achieved by buying real estate in places like the Catskills.

There’s another hope that some families might buy upstate real estate not as a getaway, but as a place to safely plant their families, educate their kids and settle comfortably. For some families, this may be a radical choice, sacrificing family cohesion over family safety as someone might have to travel back and forth on a daily or weekly basis.

The counterpoint to all of that is the thought that this time is different, that closing down the economy is not easy to reverse. And even if it were, families will be more careful about where they go. Layered on top of that is perhaps a long-term swing away from casual spending after two months of reflecting on what consumerism really means and the joy and satisfaction it ultimately provides.

As a builder who works in three counties and has been hawking my wares for two decades, I’m engaged with a broad cross-section of small businesses, clients and small-town governance. It provides a good lens to view the impacts of the pandemic and lends a more pessimistic picture.

From a real estate perspective, my strongest argument for a resurgence—families wanting to plant themselves up here permanently—doesn’t stand up to much scrutiny. If a family is making that type of urban escape, they will search for areas with very strong schools, and that is not the Catskills for the most part—it’s Connecticut, Westchester, or New Jersey. Right behind safety comes education, in terms of priority.

It’s also possible this lockdown impacts NYC much more than 9/11 and the financial crisis, because not all our buyers are bankers and lawyers. Chefs, musicians, artists, graphic designers, small businesspeople are all being significantly impacted, which could result not only in reduced demand for real estate, but also a possible foreclosure trend as these people who bought over the last 10 years find it very hard to make ends meet.

Small businesses, the lifeblood of the upstate experience, are not typically sitting on a chest of cash for a rainy day. In fact, I would guess even the ones with the healthiest pallor are only a stone’s throw from breaking even in the best of times. Suffering through a spring-season of zero business and revenues while still owing rent, utilities, insurances, payment on inventory and so on is enough to crack the foundation of any strong small business.

Relatedly, for the small towns as a whole, there is typically a business or two which are the anchors other businesses benefit from. Take the Heron in Narrowsburg, NY, for example. That business’s existence over the last decade has enabled and supported other business startups, and together they create a business community that, as a whole, is stronger than any of their parts. If any anchor in any community goes, the business district suffers or perhaps reverses and, if that happens, the attractiveness of the area for second-home investment lessens.

Small businesses also run on momentum: cash flow, marketing, repeat business and word of mouth. None of these are easy or cheap to just flip a switch and restart. They take money and customers, and there is no reason to believe that families will be rushing out to crowd themselves into small spaces once stay-at-home orders are lifted.

There is also an argument that families are enjoying the freedom from the casual consumption that defined their lives, and are finding that living smaller actually has its advantages; after being forced off the consume-consume-consume merry-go-round, many might not be that interested in hopping right back on.

My advice to the business community is to make the hard decisions now—do not procrastinate or punt. To spend as little as possible, play hardball with your vendors and payment terms; they need you more than you need them (for once). Keep your money in the bank. Cash is king. Don’t be fooled or distracted with the SBA payroll and disaster programs; not only are they not the solution, but they also might distract you from making the hard decisions you need to be making.

Good business decision-making takes clarity of vision. The clear-eyed here can see the bumpy road ahead, so fight the urge to be overly optimistic about what lies ahead, try to envision what six months of real disruption means to you, and plan to meet the challenge. That’s what we do as small businesses: We pivot and survive to fight another day. Most of us have been there, done that, and this time is a true test for sure.

Chuck Petersheim, owner of several small businesses, has been living, building and agitating in the Catskills since 2001.

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