Transwestern and Devencore teamed to solicit insight from their commercial real estate advisory teams across 43 North American offices. Here’s what brokers had to say about what’s in store for the balance of 2020.
The Canadian commercial real estate market is expected to weaken during the second half of 2020, driven by the economic impacts of COVID-19 primarily on the office market. The office index declined 29% since the year-end 2019 survey. Respondents are concerned about how long tenants will delay leasing decisions and favor work from home in the long run. The industrial sector is poised for continued, albeit slightly reduced, growth driven by e-commerce over the next six months. In comparison, the industrial index declined 22% since the year-end 2019 survey, but still reflects stable conditions as respondents expect demand from distributors, 3PLs and manufacturers.
Tenant uncertainty, driven by the economic impacts of COVID-19, is writing the script for the second half of 2020. Traditional office space will lag as occupiers pause leasing decisions and implement work-from-home strategies until the pandemic is under control and tenants feel comfortable returning. There is considerable concern about long-term tenant interest in traditional office as work-from-home strategies could offer cost saving alternatives to select tenants, increasing the possibility in reduction of space. Medical office is expected to see a short-term stall as practitioners work through the budget shortfall of temporarily shutting down operations. Brokers are optimistic for long-term growth in a sector where office space is necessary for exams and procedures that cannot be performed via video conference. Industrial, although expected to ebb somewhat, will remain the belle of the ball due to the sharp rise in e-commerce. Across all sectors, the theme consistently echoed is “we’re all in this together” which has sparked a remarkable level of creativity and collaboration.