The restaurant industry is preparing for a long, uphill battle. With government relief measures not working for many restaurant businesses and takeout service not providing sustainable revenue, industry leaders expect this crisis will lead to the permanent closure of a large number of restaurants.

The restaurant closures will come not only from those that are unable to reopen after the mandated shutdown, but those that try to resume business and are unable to turn a profit, experts say.

Reopening a restaurant will require owners to keep the business alive during the shutdown by paying rent and other bills — or by reaching deferral agreements with landlords and lenders — but the act of reopening will come with its own significant costs. Restaurant owners will have to restock kitchens, buy personal protection equipment and sanitation materials and re-train staff with new social distancing procedures that will likely be required to open.

The Coming Correction

The depth of the city’s restaurant closures remains to be seen, but brokers agree it will significantly increase the vacancy rate and change the dynamics of the retail real estate market.

Neighborhood Retail Group CEO Bethany Kazaba said she is representing an operator who owns several D.C.-area restaurants and is looking to expand in an Alexandria space where the current tenant is unlikely to renew its lease.

“There are going to be so many opportunities that come from second-generation restaurant spaces,” Kazaba said. “There are going to be good opportunities for people that really want to open.” She said she expects landlords in the near-term will try to maintain the same rental rate they had pre-crisis, but she thinks they will be forced to bring the rate down in the coming months. “Early in this, unfortunately, the landlord is going to try to replace the rent,” Kazaba said. “I think give it 60 days, maybe 180 days, if the space is still available, you will begin to see the correction.”

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