Grocery traffic gains (KR)
Publix has seen strong traffic gains once it lapped the stockpiling period of the pandemic last year. This year, some grocery chains have benefited from additional small fill-in trips to the supermarket compared to the once-a-week trip many consumers made during the pandemic. Conventional grocers have benefited from trip consolidation because the specialty grocers are not one-stop food destinations. Albertsons and Kroger have seen an average monthly traffic increase of nearly 5.5% from April through July, according to Placer.ai’s traffic data. The following chart shows the monthly traffic trends for Publix, Albertsons, and Kroger in 2021 compared to the prior year.
Return to the office (ACI)
According to Kastle Systems, its 10 cities' average occupancy rate for office buildings fell to 31.3% for the week ended Aug. 18, down another 80bps from the prior week, as seen in the chart below. Kastle’s occupancy barometer reflects access swipes to the office; it provides control systems to 2,600 buildings in 138 cities. The largest drops in the last week were in Austin, Houston, and New York City. Office occupancy varies by region, with the largest Texas cities approaching 45% and the largest California cities below 30%. The recent focus on variants and indoor mask requirements in some areas has delayed the return to the office for some, benefiting at-home consumption. Green Street, the commercial real estate advisory firm, predicts a 15% reduction in office space demand in the U.S.
Drought impact could have a larger impact in 2022 (DOLE)
Last week federal officials declared a water shortage for the Colorado River, which provides water for seven Western states. 2021 is the third driest year in more than a century for California. California’s Energy Commission approved licenses for emergency gas generators for up to five years to avoid blackouts with wildfires and declining water at reservoirs. Reservoirs managed by Santa Clara Valley are currently at 12.5% capacity, while the Shasta Valley reservoir, which supplies the Central Valley farmlands, is 29%. California also relies on underground water to irrigate crops, especially in drier years. The Sustainable Groundwater Management Act was passed in 2014 but took effect this year to give farmers time to adjust. The law will change the amount of water that farmers can pump to the surface. Less planting next year will be a necessity to comply with the Act to replenish groundwater levels. It is estimated that a million acres of farmland in Central California will be lost due to the Act’s restrictions. California supplies one-third of the country’s vegetables and two-thirds of the fruit and nuts.
The following drought maps compare the change in conditions from May 11 to August 19. Water shortages and restrictions in the Colorado River Basin and widespread wildfires have continued in northern California and the Northwest. As a result, conditions have worsened in northern California, regions of the Northwest, the Dakotas, and Montana. Monsoonal rains in New Mexico, Arizona, and Texas have led to widespread improvements in drought conditions. Most of the remaining droughts in the three states are in long-term impacts while shorter-term conditions are wet.
