CBU business dean bullish on quick recovery of local economy after COVID-19
Membertou development 'a very positive sign' for local economy, says George Karaphillis
The dean of Cape Breton University's Shannon School of Business says the local economy should quickly rev up once public health restrictions really start to ease up.
George Karaphillis says if the past is any indication, the gross national product has shown it can recover, but he admits there hasn't been a pandemic this severe for 100 years and no one really knows what will happen.
"History shows that the economy snaps back fast after an epidemic of this magnitude," the dean said. "There is some pent-up demand from different sectors of the economy."
Nova Scotia is nearing the end of the second month of public health restrictions that closed some businesses and forced others to close due to lack of customers.
If the economy does bounce back quickly, as most economists predict, then the province will have avoided a recession, which is defined as two successive quarters with a shrinking economy, Karaphillis said.
"The consensus is that it's going to be a rapid rise in economic activity in about one month's time, when the economy is actually fully operational and we're back firing on all cylinders," he said.
There are positive signs for retail stores, but the growth of e-commerce and home delivery may have changed the game, Karaphillis said.
"The buying habits of consumers has changed, especially the new generation, the millennials, do not like to shop in the malls like the boomers."
Cape Breton is heavily dependent on tourism, which will be hit hard for a year or more, but there is reason for optimism in commercial and retail operations, he said.
Two weeks ago, Brookfield Asset Management announced $5 billion in retail investments. The Toronto-based company is one of the largest owners of malls in the United States. That sends a strong signal that retail will not be left to struggle back to life, Karaphillis said.
Cape Breton developments
Also, the Membertou First Nation is building a 55,000-square-foot commercial and retail building on the reserve next to Sydney, and a local business owner is promoting a 33,000-square-foot redevelopment in a former call centre to be called Sydney River Square.
The owner declined to comment, but a sign outside the building adjacent to the McDonald's restaurant and Atlantic Superstore indicates it is being redeveloped for commercial and retail uses in two phases.
Karaphillis said with no vaccine for COVID-19, businesses will have to maintain physical distancing for the foreseeable future and that will hamper commerce to some degree.
"COVID-19 has been a major disruption for the world economy and nobody really knows exactly how the world is going to behave after the COVID-19 and when we're going to actually go back to normal," he said.
However, the Membertou development in particular is good news because it's already 75 per cent leased and the band's other properties are fully leased, Karaphillis said.
"That's a good indicator that another building, a commercial-size building, is going on now and it's going to happen although we're in the middle of this major disruption," he said.
"This is a very positive sign for the local economy all by itself."
Hudson's Bay recently announced plans to reopen its store in Sydney and the Mayflower Mall's general manager, Greg Morrison, said some retailers will open inside the mall starting on Friday.
The mall is moving cautiously and will operate on reduced hours, though, he said.
"We're really not sure at this time how many stores will open," Morrison said on Tuesday.
"We're not pressuring any stores to open. We're going to just try to open and gauge and see how things work."
Customers will be greeted at the door, given information on how to proceed and hand sanitizing stations will be available, said Morrison.
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