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Sanitary crisis shuttered 1,700 businesses in San José

QCOSTARICA – The first five months of the pandemic put an end to the clothing and shoe store that Rónald Badilla had owned for almost eight years in the center of San José, very close to the Avenida Central.

Those who walk through San José now have fewer stores windows to look for products and promotions. A total of 1,716 businesses were shuttered during the first 15 months of the pandemic. Photo: LN

By lowering the metal windows -shuttering- his business, he left behind the investment, years of work, and a lot of dedication. It also meant letting go of three permanent workers who had accompanied him in his undertaking.

“Emotionally it was very difficult, the truth is that I thought about it a lot, for everyone. But I made the best decision, no matter how hard it was; It was something that I could no longer sustain responsibly, there were very few people who went to (downtown) San José.

“I was also very uncertain about what I was going to do if they closed us again, about how the restriction would affect us, teleworking and all that.

“When I saw that many people selling on the Internet, I decided to follow the same path because the business was suffocating me more and more,” the 54-year-old merchant told La Nacion in a recent interview.

A short tour of the city is enough to see dozens of shuttered premises, where businesses used to operate, that suffered the same fate as Don Rónald’s store.

The dozens of properties with rental signs, including in prime commercial points such as Avenida Central, show the economic effects of the covid-19 pandemic in this sector, are common and not the rarity.

This reality is reflected in the official numbers administered by the Patents Section of the Municipality of San José, which shows that during the first 15 months of the pandemic or health crisis, is you will, 1,716 merchants canceled their patents to close their businesses.

Orange new patent applications; red canceled

Those numbers represent an increase of close to 30% in patent (patente in Spanish) waivers, compared to the same period the previous year.

In those first 15 months of the health crisis, 1,517 patents were applied to open businesses, a number that represents a 40% decrease in the opening of new stores, compared to the pre-pandemic period.

The head of the Patent Section of the Municipality of San José, Carlos Montero, believes that the commercial reality may be much more serious than those data reflect.

“Here we can talk about numbers, but that feeling that you perceive when you are in the streets is the true reality; because here we could say ‘we’re not doing so bad’, but I think that reality in the streets is the true commercial thermometer.

“In San José, commercial activity has always been very dynamic. If a business left, others came. But now, you can see in any block or sector of the canton, several stores that have not yet recovered (remain closed).

“There is this uncertainty about what might happen and I think people stopped daring to open a business for that very reason,” said Montero.

But we cannot blame solely the pandemic for the current situation in the capital city, the signs were there from before.

Jorge Madrigal, president of Masterfoods Costa Rica, a company that is dedicated to commercial real estate, shares the thesis that the pandemic only worsened the conditions of a sector strongly hit by the previous economic situation.

These four commercial premises on Avenida Central were vacated when tenants closed their businesses. Only in downtown San José, the Masterfoods Costa Rica company has 25 storefronts for rent. Photo: LN

“The symptoms were already quite evident since 2019. The pandemic accelerated the vacating of premises in all types of formats, from small store-front to medium and large businesses, as well as those located in food courts.

“Unemployment reached levels never seen before, particularly in San José and shopping centers. In the pandemic, not only is there much more supply than demand, but vehicular and pedestrian traffic is much lower as a result of ‘stay at home’ and the consumer’s purchasing power is much lower. There is also a significant reduction in money circulating on the street and much less willingness to spend it,” he said.

Today, as a result of the closure of business, this company has 25 premises for rent, only in the center of San José.

“Many tenants who leave close up do so because they cannot cover their operating expenses such as payroll, social charges, rents. They have resorted to their savings and discounted sales of their products and services, but there is a time when it is no longer viable to sustain the business, low sales do not even allow them to survive,” said the Masterfoods representative.

This prime location, located in the heart of the Avenida Cental, in downtown San Jose, where thousands of consumers walk by every day, is for rent due to the closure of the previous business. Photo: LN

Hope

In this sea of uncertainty, however, there is also hope for the progress of the vaccination campaign against covid-19, supported by improvements in the economic activity indices in the commercial sector.

“We are still waiting, first, that vaccination advances as the best resource to cope with this situation and, second, that elements of the political and economic climate of Costa Rica become clearer so that somehow trade can begin to flourish.

“The other day listening to an economist say ‘I see some positivities.’ And I really liked that. There is a reduction, for example, in unemployment. Slow, slower than many other countries, but that is a reduction in the end,” said Allan Gerli, director of the Cámara de Comercio de Costa Rica (Costa Rica Chamber of Commerce).

For the director of the Chamber of Commerce, the businesses that managed to sustain themselves during the pandemic will emerge strengthened from this process, due to all the transformation they experienced to stay afloat.

However, he stressed that the economic outlook will need to continue improving for these businesses to completely emerge from the crisis.

“I think we are seeing the light at the end of the tunnel. There is no doubt that those who have managed to get to this point have a greater opportunity to put down roots in this reactivation process. And they have an advantage, but they need consumers, the (economic) environment to accompany them. Other stores will also appear and commerce will sprout again,” said the businessman.

 

Written by Q COSTARICA

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