COVID-19. Coronavirus. Vaccine. It seems we cannot turn on a news report or cruise social media without encountering some message relating to the global pandemic. However, most of us have settled into the new normal and accept this as our societal focus—for now. While most people have adjusted to this, individual industries, including commercial real estate, continue to experience volatility.

Coming into 2020, commercial real estate held a strong position and its future looked bright. As we close out 2020, some may feel like the industry has too much turmoil to warrant any serious consideration for investment, but that is just not true. Opportunities in commercial real estate exists now in selected sectors.

Major CRE sectors under pressure

It is no surprise that core office space, hospitality, and retail have been the hardest hit in this age of the coronavirus. With so many companies turning to work from home (WFH), protocols, expansions, renewals, and new long-term leases have been put on hold. While companies are not eliminating office space altogether, they are re-evaluating how and to what extent they will need to maintain a corporate presence, particularly in larger cities.

Quarantines, shutdowns, and rules governing capacity at restaurants, gyms, and movie theaters have stunted the hospitality sector. An indicator of trouble in this part of the CRE world is the struggles seen with the airline industry. Most major carriers have had to downsize staff and the number of flights because people are not traveling. Even stalwart Southwest Airlines has been forced into massive layoffs as business and pleasure travel have been largely grounded. Retail is no surprise. While some big box stores have mustered through this pandemic, many like Bed Bath & Beyond, Sears and Target in the Toronto area in most cases are either struggling or have shut their doors. Small retailers such as Henry’s Camera, Victoria’s Secret and GNC to name a few who may lack capital reserve are hit hard and may shut all or some or all their doors come in the New Year.

A Perspective Change Can Reveal Opportunities

While brick-and-mortar retail has been delivered a one-two punch, e-commerce is rapidly and continuously on the rise. By some measures, online purchasing is as much as 42% higher in 2020 than last year. That bodes well for the industrial CRE sector. According to Rich Thompson, International Director, Supply Chain & Logistics Solutions, JLL, “The exponential growth of e-commerce has driven demand for industrial real estate for the last ten years, and the sudden spike in online activity since the crisis has accelerated that demand.” Heading into 2021, that kind of news signals ample opportunities among spaces appropriate for e-tailers to use for warehousing or last-mile distribution space.

One additional consideration for industrial is the re-shoring of supply chains. Companies that once relied on manufacturing from abroad are turning to home to repair damaged supply chains. This has been good news for Canadian manufacturers who have seen trade surplus with the United States grow from $8.8 B to $142.1 B, the largest it’s been since 2008.

One last consideration for investing during a pandemic is multi-tenant housing. As reported by Bisnow, “Immigration may be Toronto real estate’s ace in the hole in a post-pandemic world….” In contrast to other parts of the world, Canada has continued to welcome immigrants to the tune of about 340,000 annually. Nearly 60% of those folks moving to Canada are identified as “economic class,” meaning they have got the needed monetary resources for entry. A promising sign for the housing market—more people, means a greater need for housing.

The pandemic is not all bad news. Yes, there is some market volatility and contraction in certain sectors. Still, those inclined to look a little harder will find opportunities. Investing in CRE now is a great way to take advantage of those.

Contact Creiland Consultants Realty Today to Learn about exclusive off market opportunities!

Creiland Consultants Realty is a full service disciplined commercial real estate advisory firm based in Toronto, Ontario. The management team consists of Certified Commercial Investment Member (CCIM) with extensive experience in a wide range of asset classes across the Greater Toronto Area. We are here to support your goals and take pride in being a commercial real estate partner you can trust. Visit our website to learn more!