As 2020 draws to a close, Canadian CRE investors are anxiously awaiting to see what market conditions they could expect in the upcoming year. The COVID-19 pandemic has had an unprecedented impact on businesses across industries, and the resulting increase in vacancy rates has caused concern among Canadian retail CRE investors, landlords, and tenants. But these vacancies might only be temporary. With the introduction of the COVID-19 vaccine, the future of Canadian CRE is looking bright.
Two Possible Outcomes for the Office Sector
The office sector was perhaps the most heavily impacted by the health crisis. Social distancing measures have pushed businesses to adopt new technologies and enable work from home in order to continue their operations. The efficiency and cost-saving benefits of remote work have proven to be life-saving during these trying times.
As such, when it comes to the office sector predictions for 2021, expert opinions are divided. We have some experts who states that work from home is the new normal. The benefits of it are too great to overlook and businesses will stand to gain a lot from it, pandemic or not. However, on the other hand, we have those who believe that work from home is just a temporary trend, and we’ll go back to the way things were as soon as the COVID-19 vaccine is distributed. In all likelihood, the office sector in 2021 will have to accept a compromise. Work from home will continue, but not to such a great extent as in 2020. Businesses will be flexible, allowing for both remote and on-premise work.
Suburban Canadian CRE Market on the Rise
Major downtown markets in Canada have seen the biggest rise in vacancies, as was expected. Businesses with more space than needed had to downsize, while those with expansion plans had to put their expansion plans on hold. That has caused a paradigm shift that could prove beneficial to the Canadian CRE market, as many businesses have started expanding in suburban areas and provinces; such as, Alberta and Saskatchewan. More affordable, lower density locations are driving business growth outside Canada’s largest cities. These suburban locations are attracting business leaders and investors and creating new opportunities for local communities.