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Uber Riders Returning: Good News for CRE Investors

[Updated: Apr 20, 2021 ] Apr 20, 2021 by Marc Rapport
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So, a couple of reports have just come out that may be positive economic indicators in a related kind of way. The first is that Uber Technologies (NYSE: UBER) said its rideshare services just posted their best month since March 2020, and average daily bookings were actually up 9% year over year.

The second is that, according to the U.S. Census Bureau, March sales at "food services and drinking places" -- their words, not ours -- were up a resounding 36% from the same dismal month last year, when the pandemic had just begun shutting down eateries and drinkeries by the thousands.

Of course, not all those Uber riders were going to restaurants. But some were. Or ordering from one. Or going shopping. Or to a hotel. Or maybe even to work in an office. They're going somewhere.

It's all good news for those businesses and the real estate investors -- including real estate investment trusts (REITs) -- that depend on their revenue to generate their own. The vaccination rollout is taking its toll on the pandemic, and pent-up demand is beginning to show itself, which is good news for all kinds of commercial real estate.

First, some riffs on the restaurant recovery

Just a bit more on the restaurant front: Bisnow reports that this past Saturday, the U.S. Small Business Administration released application requirements and eligibility details for the $28.6 billion Restaurant Revitalization Fund.

That, of course, was part of the $1.9 trillion American Rescue Plan that President Joe Biden put his John Hancock on in March. Restaurants that hung in there well enough to take advantage of this opportunity may now be the destinations for a lot of these Uber rides.

Further evidence that the carnage may be abating is in this piece just posted by QSR Magazine -- "The Restaurant Recovery Kicks into Gear" -- that lists a series of metrics that show how things are almost back to normal -- a new normal, at least.

And then hotel and travel also seeing signs of recovery

Of course, that's just one sector of the retail economy ravaged by the coronavirus pandemic. Hotel and airline bookings also are on the rise, and some destinations are already reporting summer sellouts. Airbnb (NASDAQ: ABNB) also says it needs millions of new hosts to meet expected demand.

But back to Uber. The company says its delivery services also are seeing growing use, and it's looking for more gig workers to get behind the wheel to deliver riders, meals, and more.

Uber Vice President for U.S. & Canada Mobility Dennis Cinelli says in a blog: "In 2020, many drivers stopped driving because they couldn't count on getting enough trips to make it worth their time. In 2021, there are more riders requesting trips than there are drivers available to give them -- making it a great time to be a driver."

The Millionacres bottom line

The vaccine rollout is having its intended effects: saving lives and getting people back out shopping, dining, and traveling, although the recovery is uneven.

Here in my home state of South Carolina, the Grand Strand area anchored by Myrtle Beach is reporting hospitality bookings at or exceeding the same period in pre-pandemic 2019. Right now, not this summer.

On the other hand, a Millionacres colleague just got back from a Vegas junket and said he was struck by how empty the casinos he saw were and how hard it was to find an open Starbucks (NASDAQ: SBUX) or bar.

So, whether it's a great time to be in all those businesses that Uber riders take people to and from matters where the business is and what they do. Office occupancy, for example, remains a very large question mark.

But all in all, things sure look better now than they did at this time last year. Now vaccinated myself and with a mask on (and hopefully on my driver), I'm ready to roll with the rideshare again. Maybe I'll go on a trip now that I feel safe enough to fly again. And then to a restaurant. As long as we sit outside.

We all have our own comfort levels, and that's not likely to change anytime soon, is my hunch. But another hunch is that we may be on the verge of a post-pandemic retail recovery that could make now a very good time to look at some likely winners among investment choices.

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