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Post-COVID Urban Real Estate Landscape Brings High-Risk, High-Reward Franchise Opportunities

Franchisees have to decide if high rent payments are worth the reward of urban revival.

By Justin Wick1851 Franchise Contributor
Updated 12:12PM 08/03/21

Business in urban areas is finally springing back to life after COVID-19 restrictions have eased in markets across the country. But with resurging business opportunities have come sizable rent payments, forcing franchisees to decide if astronomical monthly payments are worth the influx of potential customers.

On Sunday, CBS News broadcasted a report on real estate markets in major U.S. cities. “Millions left cities in 2020 during pandemic shutdowns, heading for the suburbs and beyond. Now, many are returning. Real estate markets are skyrocketing. Restaurants are packed, and even traffic is back,” said CBS News’ Michael George.

Richard Florida, a University of Toronto professor, was featured in the CBS News segment. He spoke on how the U.S. is seeing the beginnings of an urban revival. “Our cities are going to be less about a place to go to work, and much more about a place to go to connect,” he said. This suggests the urban franchising market has shifted, and many companies can take immediate advantage of unrivaled consumer demand in these areas unlike before.

This newly revived urban atmosphere can be ideal for franchises to revitalize their post-pandemic figures, but dramatically increasing real estate prices are keeping some franchises from moving into previously in-demand urban locations. This makes it tough for a franchise to test the waters in a new urban area, should their endeavor underperform in such a location. 

We aren’t entirely clear of COVID-19 just yet either, as as the Delta variant has caused some parts of the country to strengthen mask mandates. A jump in new cases could have the ability to weaken urban traffic in the coming weeks. When it comes to urban expansion, franchises are forced to weigh short-term risk with long-term reward in the event this urban revitalization is here to stay.

Now could also be the time for franchises to jump at these real estate opportunities before building rates jump even further. There could be a further increase in urban real estate demand if and when COVID-19 is officially a thing of the past.