Long deceased author, naturalist, and adventurer John H. Tobe once said, “Disease is the biggest moneymaker in our economy.” As Canadians continue to struggle in this era of COVID-19, one must ask who makes money? Municipalities, for instance, which are arguably the first-line responders for providing care and comfort to citizens, have been sacked with record-breaking expenditures during the pandemic. Various industries have experienced similar impacts, including retail [link to the previous article], hospitality, transportation, tourism, and others. Nearly one in four Canadians are now on long-term unemployment.

The situation has grown so dire that Finance Minister Chrystia Freeland has characterized the Canadian economic situation in historic proportions, “This is the most severe challenge our country has faced since the Second World War. It is our most severe economic shock since the Great Depression, and our most severe public health crisis since the Spanish Flu a century ago.”

COVID’s Impact on Commercial Real Estate
Uncertainty is among the chief worries for those in the real estate sector. Investors, owners, sellers, and those leasing space are vexed by when and how the economy will recover. Many experts agree that the pandemic is having a more significant impact on commercial real estate than the 2007 financial crisis. Unlike the recession earlier this century, coronavirus has affected demand as people quarantine and social distance, businesses replace their presence in urban centers with work-from-home workforces, and consumer confidence plummets.

Despite the naysayers, the overall Canadian recovery and that of the commercial real estate will rely on several factors. The speed of virus testing, the development and deployment of vaccines are critical factors to returning to “normal.” Society, too, will need to adjust and become more comfortable with guidelines for personal interaction (social distancing).

Stimulus from government intervention will also undoubtedly have a hand in the recovery. However, that type of public intervention means generating revenues and for lawmakers, putting cash in the till means taxing the citizenry. The form of these taxes can vary, but income tax and property tax seem like the two most likely candidates. While the latter is less favorable for the commercial real estate investor, it likely less favorable for society as well, which is hoping for social services and social housing.

Emerging Trends Post COVID-19
There’s no doubt that the pandemic has put the economy into a tailspin. According to PWC Canada’s Emerging Trends in Real Estate 2021, industry shifts accompanying the pandemic are downright confusing, “Some of this year’s trends are contradictory, and trying to make sense of the change and uncertainty isn’t easy.” The company, however, does hold out hope, “The coming year will be all about embracing opportunities to be resilient in the face of uncertainty while shifting strategies to anticipate and stay ahead of the emerging, and accelerating, trends.”

According to PWC, opportunities will happen by riding the waves of change. The restructuring of the retail environment and the skyrocketing growth in online retail is one such place to look. Other trends show promise like, social distanced work environments, proptech plays, or tailoring strategies to meet the housing needs of changing demographic trends.

Regardless of what the future holds, it’s always best to approach your commercial real estate needs with an expert at your side. A team of qualified professionals will help uncover opportunities that are best for your business.