Posts in September 2020
What to Expect While Reopening Wichita’s Metro Area Economy
 

Illustration by Ainsley Christofferson

Part I:  Real Estate and Retail

Just over 60 years ago, CBS aired the classic Twilight Zone episode where (spoiler alert) department store mannequins practiced personification, and one woman realized that her freedom to roam in human form was ending. In what may feel to some as if we’re living a 2020 sequel to that episode, people are asking:  “When is it our turn feel free again, to leave the confines of shelter in place to simply venture to the grocery store, without a mask, and without wiping down our purchases with Lysol wipes upon return, and without scrubbing our hands raw while humming the alphabet?”

The pandemic has led to changing realities, and one of those for the Wichita area is that the unemployment rate jumped from 3.8% to 10.8% during the first six months of 2020, just a tick under the 11.1 % national figure, according to the U.S. Bureau of Labor Statistics. Wichita manufacturing in June, 2020, was down 8.1% from the same month last year, and “Leisure and Hospitality” down 15.8% for the same period.  That translates into great challenges for the “reopening” of Wichita aerospace, retail, restaurants, entertainment, and everything else that makes this community economically viable, and enjoyable.

Data: Cornerstone Data; Chart: Candor Visuals

Worldwide, tensions flare among those in leadership, and those who aren’t; without doubt, Covid-19 is the most contagious among humans of the coronavirus family, and many leaders are calling for less activity to limit the number of cases, and deaths. But if we aren’t moving, communicating, selling, and buying, then economically, businesses and communities are also at risk. Local area businesses appear to be heeding medical experts’ recommendations to socially distance, limit occupants, and wear masks, yet, as of August 29, the Sedgwick County Covid-19 dashboard reported a total of 6,772 cases, and 50 deaths, (note the chart’s “New Case” numbers for Sedgwick, and contiguous counties above; search your county’s status and other Covid-19 data at Cornerstone Data).

For real estate developers like George Laham, his challenge is two-fold, with 15 commercial properties in the Wichita area, which contain numerous retail outlets, many local, several more national chains, Laham knows land value is directly connected to retail performance. Given that Brooks Brothers, Neiman Marcus, J.C. Penney, Pier I, GNC, and so many other major national players have declared one form of bankruptcy or another in 2020, what will it take to maintain his business, Laham Development’s, strong presence in the Wichita area? What will the retail climate look like in a few months, even if Covid-19 is in remission? “Businesses will ‘reopen,’ Laham said. “but the question is: what financial shape will they be in?”

Back in 1992, Laham persuaded The Gap that Wichita is a valid location for national chains by convincing owners that the Wichita area is adequately populated to create profitable revenue. “If you draw a circle around Wichita to include every town that’s within a two-hour drive, we had over 870,000 people who would shop in Wichita,” Laham explained. “That was around the threshold that many retailers demanded, and still do.”  Laham insists that other investors, in spite of the pandemic, are eager to expand to the Wichita area soon. “We’ve seen Sephora, Pottery Barn, and Trader Joe’s choose this market, many others are on the list.”

In terms of residential property, Wichita State University’s Center for Real Estate predicted in its annual report that the Wichita area will realize just under 1,000 single family permits for new construction, and over 10,000 home sales in 2020. Tonya Stephenson, an agent with Golden Realtors in Wichita, is watching that prediction morph into a convoluted trajectory.

George Laham, founder of Laham Development, believes the Wichita metro area is ready to bounce back strongly once pandemic cases subside

“Covid-19, along with record low mortgage interest rates has created an extreme sellers’ market. The pandemic hit just as the seasonal home selling season would have typically started,” Stephenson explained. “Because of the lockdown and uncertainty of what the future would hold, homeowners who were considering selling during the summer simply did not list their homes for sale.” The WSU Center for Real Estate forecast an overall 4.3% rise in home prices in 2020, but that may prove too low. “Buyers, particularly first-time home buyers, were racing to the marketplace buoyed by interest rates under 3%,” Stephenson said. “We have been sitting at a 2-3 week inventory for most of the summer.”  The result, Stephenson added, is that “buyers are racing to put in an offer on every new listing, particularly in homes priced under $200,000;  most listed properties have multiple offers within the first day or two and often end up selling for more than asking price. As a result, home prices have escalated in a fairly short time frame.”

 As for the pandemic’s impact on retail businesses, while strolling through your local supermarket, or favorite fast food lane, you may have noticed another inflationary impact of the pandemic: the United States Department of Agriculture reports that from June 2019 to June 2020, shoppers realized an increased cost of 5.6% for food consumed in-home, and a 3.1% increase for foods outside of the home. Local businesses are scrambling to build drive-throughs, boost internet sales, or provide pickup or delivery services to survive, since dining out in close contact to others has declined, and supply chains have faltered. Several favorite food establishments have closed down, attributed to the reduced traffic caused by the pandemic.

Two Wichita area service providers that aren’t experiencing decline are in the automobile repair business, which was deemed “essential” by the federal government. European Car Company’s David Leivian said that car owners haven’t “skipped a beat” calling him for repairs. Bill Thompson, who’s operated Kansasland Tire on North Maize Road for 24 years, attributes a full schedule of repairs on a loyal customer base, and perhaps people reflecting on their “To Do” lists during the “shelter at home” months since March. “We were breaking monthly records before the pandemic hit, and our business is still going strong through the summer months,” Thompson said. “Even though people aren’t traveling as much, their stimulus check is like ‘found money’ that they’re putting into car maintenance.”

It hasn’t been as easy for many other Wichita area retailers, as state and local laws have dictated who can remain open, and how many occupants are allowed within a building, but optimism still remains in spite of the uncertainties the last months of this epic year present. “I told my staff when all of this hit, we have to hold on tight, and stay positive,” Laham said. “Look forward, not down.”

Rod Serling created a television series that forced people to consider alternative ways of life, and often, disparate ways of viewing who we are, and how we could function. This pandemic is demanding that citizens of the Wichita area adapt to a “new normal,” and many locals are embracing this ultimatum with the same grit that brought them to business in the first place. Others are treading water, and still others have decided to cut their losses and leave their business behind. Which businesses are considered essential by both government officials, and consumers, is dictating how robust the Wichita area real estate and retail sectors reemerge in the post-Covid-stressed economy.

Editor’s Note: Next month, we’ll investigate how manufacturing is faring in our region, and to what degree optimism prevails in that sector of the area’s economy.

 
The Quarantine Class Returns
 

How USD 259 and Other Local Districts Are Reopening Kansas Classrooms

Since the first case of COVID-19 was confirmed in Washington State in January of this year, life in the United States has been more than a little bit altered. Information, misinformation, theories and new findings are being presented and analyzed by people all over the world each day. With autumn soon creeping into Kansas, parents and children alike are curious what to expect when teachers and their students return to the classroom in the Wichita area, most on September 8 of this year.

With the Wichita Board of Education pressured to provide the required 1,116 student interaction hours within the school year, there are three learning models which USD 259 is proposing to head the return to education. They are: 1) On-site (face-to-face) learning, 2) MySchool Remote (local online) learning, and 3) Education Imagine Academy (virtual education) learning. Other area school districts are proposing some version of the same choices. Under the decision made during the August 20 Board of Education Meeting for USD 259, parents of Pre-K - 5 students will have full choice between all three options. For students in grades 6-12, however, MySchool Remote, and Education Imagine Academy, remain the only two means for an education. This is valid through the first nine weeks of school, and may be subject to change afterwards. This is a unique development. Surrounding districts, including Valley Center, Derby, and Park City, all offer in-person learning opportunities for all students included with optional remote learning. Maize, Andover, and Goddard schools are leaning toward a hybrid learning environment, spending specific days in and out of school throughout the school week, while Pre-K - 5 students are mostly in-person.

For Wichita Public Schools, onsite learning is by far the most supported education practice within the district. It was discussed in the BOE meeting held on July 30, that of the 911 classified USD 259 employees surveyed toward the end of July this year, more than 53 percent of them preferred onsite learning as opposed to the other options. On-site learning remains the most familiar and easily manageable path, though it is not without heavy safety restrictions. The CDC’s recommendations concerning masks and social distancing must be followed, with a close eye on the health of students and faculty throughout each day. Students who ride the bus must be distanced with assigned seating and, if applicable to them, must share seating with their household members. Masks will be required by all passengers, including the driver. Students will unload the bus from front to back.

For many families who are struggling economically, on-site education is a reliable and often necessary way to get enough food for children every day. This is vital, since so many people have become unemployed during the pandemic. Food services within an on-site school system would be simplified and quick, with no lunch bars and restricted eating areas. Several area districts set up “grab and go” programs this summer to provide food services for those who qualify for free or reduced breakfast, or lunch.

MySchool Remote, the second most supported model (with upwards of 15 percent approval among the 911 employees mentioned earlier), will offer online schooling with a considerable amount of teacher-student interaction. With all necessary required technology provided, students would remain enrolled in their area’s school of choice and would thus interact with that school’s staff. Daily, students and teachers are scheduled to convene over video messaging platforms, Microsoft Teams for all USD 259 students. As with before the pandemic, middle and high school students will interact with their teachers as if following the in-person schedule.

Education Imagination Academy is the fully virtual, less localized education option for students within the USD 259 area. The Academy’s rosters for the 2020-21 school year are completely filled. The Education Imagine Academy offers flexible hours to suit student and parent needs, with more than 70 courses offered. For those interested, an e-sports league is a program also provided by the Academy.

In June, the Maize school district offered a survey in which 70 percent of parents answered that they were most comfortable with their children attending schooling in person in the upcoming year(s) amidst the virus. Already in USD 259, the novel coronavirus has been confirmed at Cessna Elementary, Curtis Middle School, Sowers Alternative High, and North High - all within the staff community alone, and only since school faculty returned earlier this August. The total number of cases within each school is unknown. With many students soon to be inside learning institutions, the question of a coronavirus outbreak looms on the minds of many people. With the safety of children and their educators in question, there is much to consider, and much alternative planning to be completed.