Rocky months lie ahead for Canada’s commercial real estate market, but the sector will likely experience a remarkable revival once the COVID-19 crisis passes, Morguard Director of Research Keith Reading predicted.
“Confidence that the virus is under some degree of control, ideally a vaccine, but minimally a treatment or processes that minimize exposure … will boost the confidence of consumers and businesses. As a result, consumers’ demand will improve, which will expand businesses and eventually the economy will recover,” Reading said in an interview with MBN. “Then, property owners and managers will have confidence that tenants will be able to pay rent and eventually expand. As economic outlook improves, investor confidence will increase.”
Such a virtuous cycle might also play a part in the recovery of the similarly beleaguered residential market, according to analysts.
Reading also said that the commercial market is ideally placed to respond to the sea change brought about by the pandemic.
“COVID-19 has emphasized the importance of human interaction and technology,” he said. “The commercial real estate sector will evolve to accommodate both people and business in the future. Mixed use will continue to expand and health and sustainability will move further to the forefront. Owners and managers will position assets to best meet the needs of businesses and people moving forward.”
Industry players can draw assurance from the segment’s fundamental robustness, Reading said
“In my over 30 years in commercial real estate, the commercial sector has risen to the challenge of several downturns including the late-80s’ recession, the dot-com crash and the Great Recession/financial crisis. I have no doubt the industry will rise again, after the arguably most significant crisis since the 1930s’ Depression,” he said . “Through it all, people and businesses have needed places to live and work. I don’t see that changing.”