The Road Back: Forecast predictions

Hospitality and tourism

Colorado, with its world-famous ski resorts and James Beard Award-winning eateries, is a mecca for those who love getting outdoors or hunkering down for a delicious meal.

Unfortunately, the COVID-19 pandemic has crippled the state’s hospitality and tourism industries as much or more so than any other sector.

SPONSORED CONTENT

The many benefits of simple, coordinated healthcare

Kaiser Permanente combines health care and coverage in one connected system to maximize employee health and minimize employer costs.

Resort towns were some of the first areas in the state to report virus outbreaks in the spring, and the pandemic has since gone on to wreak havoc on the bottom lines for some of Colorado’s biggest ski area operators.

Vail Resorts Inc. (NYSE: MTN) posted a $153.8 million quarterly loss in December and has been forced to drum up $1.1 billion in new financing to get the company through this lean period.

While resorts have reopened for the 2020-2021 winter seasons, sales receipts are likely to remain depressed as Colorado’s ski areas are operating at reduced capacity.

Restaurants and bars have struggled through a rollercoaster of forced closures, reopenings and reduced capacities as the virus has ebbed and flowed in Colorado.

The pandemic is “the most challenging crisis the restaurant industry has faced in living memory,” University of Colorado economists wrote in CU’s 56th annual Business Economic Outlook, published in December.

“In March and April, this industry by far lost the greatest number of jobs and recorded the greatest percentage decline — shedding 161,200 jobs, 46.7% of the industry, in just two months,” the report said. “Employment in the industry is estimated to total 273,400 in 2020, an annual decline of 71,200, or 20.7%. Industry recovery will be dependent on a vaccine and a resumption in consumer activities. Annual growth will resume in 2021, but the industry will remain well below peak, growing 19,200 jobs, or 7%.”

Communities have lost culinary mainstays that have served hungry locals for decades. For example, June saw the closure of The Med, along with sister establishments Brasserie Ten Ten and Via Perla, which had been a Pearl Street staple since the early 1990s.

While economists predict the industry will begin to bounce back as more people are vaccinated and feel more comfortable venturing into restaurants, employment totals might not reach pre-pandemic levels for several years.

Commercial real estate

As the virus changed the way people work by forcing many to work from home, it has also shifted the outlook for the region’s commercial real estate sector.

Office space in the Boulder Valley had a vacancy rate of 9.6% in November, much higher than in recent years, according to a presentation from senior broker associate at Gibbons-White Gregory Glass at BizWest’s 2020 Boulder Valley Real Estate Conference.

Still, experts are bullish on a recovery for the office market over the next few years.

While working from home has disrupted business norms, including the need for offices, Gibbons-White Inc. Lynda Gibbons said that “being together allows people to be more creative, more productive,” and predicted that “returning to the workplace will be a powerful stimulant” in the months ahead as the pandemic gets under control.

Real estate professionals are far less bullish on the retail market, which has been in freefall for years as a result of the emergence of e-commerce. These struggles — with some notable exceptions, such as grocery and liquor stores — have been compounded by the pandemic and the resulting business restrictions.

High-profile retailers including the Nordstrom’s Flatirons Crossing store in Broomfield, JCPenney stores in Fort Collins and Greeley, Pier 1 Imports Inc. locations in Fort Collins and Loveland, and The Loft women’s clothing store at the Twenty Ninth Street shopping area in Boulder have all closed up shop in the past year.

As a result of these closures, property owners are begging to move toward redeveloping retail areas into mixed-use centers with shopping, entertainment, housing and offices.

“We’ve been working with [FlatIron Crossing landlord Macerich Co.] in more detail over the past year and a half about the redevelopment of a portion of FlatIron Crossing — the addition of some residential uses, some hotel uses, some offices and some green open areas,” Broomfield deputy city manager Kevin Standbridge told BizWest last summer.

While the office and retail markets have taken a hit, the flex-industrial sector remains red hot.

Aerospace and clean energy manufactures, pharmaceutical drug makers and last-mile distributors have buoyed this market locally.

“There is a significant amount of equity that is invested in real estate each year that’s no longer going into retail and probably not going into office as much anymore because of COVID,” Freeman Myre Inc. principal Andrew Freeman said in January. “So the two product types that are healthy and left standing are industrial and multi-family (residential).”

Health care and biosciences

As local health-care providers worked tirelessly to treat wave after wave of COVID-19 patients, biotechnology companies in the region raced to develop the drugs used to help treat those patients.

Firms such as Arca Biopharma Inc. (Nasdaq: ABIO), Bolder BioTechnology Inc., CordenPharma, ACG Biologics, Brickell Biotech, Mbio Diagnostics and New Iridium were all involved in the development of COVID-19 treatments or tests.

Local educational and research institutions also stepped up.

University of Colorado-Boulder researchers at the BioFrontiers Institute built a saliva-operated COVID test that doesn’t require invasive nose swabs and provides results in 45 minutes.

Colorado State University scientists researched ways to repurpose existing vaccines used against tuberculosis and smallpox, along with one derived from a modified version of a bacterium found in yogurt.

Emergency conditions have called for emergency measures at local hospitals throughout the pandemic.

Jennifer Alderfer, the CEO of Good Samaritan Medical Center in Lafayette, said this fall that the region’s hospitals have been operating in an emergency command structure system for hundreds of days in a row. With the resurgence of the virus during the fall and winter months, there’s been no rest for the weary.

The pandemic has forced hospitals to work more closely with public health officials than they have in the past because knowing if an outbreak is coming is critical for hospitals trying to share resources where they are most needed, Longmont United Hospital CEO Christina Johnson said in September.

“I think we’ve become much more data-driven with respect to community and understanding outbreaks early on,” she said.

The outbreak has not only taken a physical toll on providers who, at times, have worked long hours for days on end. It’s also taken a toll on hospital profits.

“The outcome of (refitting hospitals for COVID surges) was that across all the organizations that I represent, financial challenges were associated,” Boulder Valley Care Network Ben Dzialo said.

In addition to retrofitting costs, revenues have been reduced by the cancellations of many non-COVID-19 procedures during the outbreak.

The pandemic has hastened the trend toward telemedicine as many patients have been unable to meet with their practitioners in person.

Before COVID, the number of doctor visits that were done via video chat was about 6% or 7%, said Michael Gall, a senior director of large group sales at Kaiser Permanente. But after social distancing and stay-at-home became the norm, telehealth’s utilization rate for insurers and care providers skyrocketed to upwards of 90%.

Health-care providers will continue to play a major role in managing the COVID-19 outbreak as they distribute vaccines to the anxiously awaiting local communities.