LEASE RATES & BUILDING VALUES: A PANDEMIC STANDSTILL

To understand why lease rates and building values haven’t declined during COVID, let’s look at the big picture. Occupancy rates are in somewhat of a holding pattern until the economy picks up & landlords, tenants & investors decide what to do with their spaces. Commercial real estate is just as affected as industrial real estate. According to StatsCan, 40% of Canadians have worked remotely due to the pandemic & this could be the “new normal.” Does this mean the end of office & industrial space, especially when leases expire? Pre-COVID, industry trends suggested a decrease in demand for office space within industrial buildings & smaller office footprints. That’s going to slow down post-pandemic considering the need for social distancing if workers go back into a physical work environment. On the industrial side, as e-commerce increases, so will demand for warehouse space, more so for e-retailers than for traditional retailers. An attractive investment for sure! Let’s hope more inventory pops up so that the supply chain can cope. And what about the manufacturing sector? With experts claiming it’s the “end of globalization,” keeping manufacturing within Canadian borders will boost our economy in more ways than one. I’m all for that. Canadians are resourceful and we can make it work!