Will The Commercial Real Estate Market Revert Back After COVID-19?
The pandemic has caused so much curiosity and concern over what it will influence and change over the next few months. Investors are developing a growing concern over what permanent changes will result from this lockdown. Every industry has seen an impact to varying degrees, and the real estate market has inevitably been altered as well. We’ve seen so many businesses change how they’ve had to function or unfortunately shut down. This has generated so much worry as we’ve seen big name businesses close their doors permanently. Will the commercial real estate market return to the way it was before COVID-19? This cannot be fully answered until everything settles down. But experts believe it won’t have that big of an impact when life readjusts to the status quo.
It’s likely that the culture of the office space will mostly (but not entirely) revert back to what it once was. The question that remains unanswered is when. After the isolation settles down it’s inevitable that safety guidelines will have to be enforced in the following months, but all this social distancing is not going to want to keep people out of the office. There are so many people excited to return to their workspace, most of us miss the social interaction we’re so accustomed to. The vast majority of people want to dive back into their routines. Many business owners generally prefer to have people in the same environment, as this develops a strong sense of community and fosters better communication for stronger results. But also on the contrary, many businesses will likely adapt to smaller areas and remote operations; something which not all businesses are capable of. Many employers will see the cost benefit of having less employees at a given location, but this also lends itself to the possibility of more businesses taking up a particular unit. It’s likely that office buildings will be affected the most in the commercial market.
A large concern of business owners is that the vast majority of retail locations will now have to resort to a majority online presence. With the strong popularity of online shopping it seems like the move to online retail stores will be less prevalent after so much has already been forced to move over to the internet. People still want that customer service interaction, shoppers still like the idea of going to stores and seeing the physical product. This also comes back to the idea of social interaction, not everybody desires this experience, but so many do. In a world of online convenience we still crave the outdoors and visiting our typical hangouts. We saw people flood locations as soon as they reopened their doors during COVID-19.
There is a lot of concern had by investors of the retail space, but this doesn’t at all mean the end of office workers and brick-and-mortar stores. An alteration is inevitable, but it will not be to a devastating degree. These unoccupied spaces could potentially turn into more housing for the city of Toronto as we will still be suffering from a housing crisis in the future. We have such a heavy influx of immigration and limited space, it’s inevitable the space will find occupancy. There will always be opportunity in the real estate market, and if you do feel uncomfortable focusing on one aspect, it could be time to diversify your profile more and get creative. The truth in this industry is that values will go up and down as they continuously rise. There will always be a need for commercial real estate, regardless of what’s happening in the world.
