The global pandemic of COVID-19, or coronavirus, has left its impact on countless industries. The tourism industry has taken the hardest hit to date, but many others are suffering losses as well. This has many Canadian CRE investors worried — what will happen to the commercial real estate if the virus continues spreading?
While the situation is quite serious from a health standpoint, Canadian retail CRE investors are actually in a good place and would benefit from investing in commercial real estate amid the pandemic. Let’s see why.
The rapidly increasing number of patients with confirmed cases of COVID-19 has some in a state of panic. Many fear that the worst is yet to come, and governments, healthcare officials, and businesses are doing all they can to stop the epidemic from spreading.
That means closing restaurants, schools, gyms, museums, and shopping malls around Canada. Some have shortened their working hours, and we’ll have to see how the situation with COVID-19 develops before we draw conclusions about whether others will follow suit or temporarily close.
While clothing retailers, restaurants, and coffee shops cannot help but to close their doors for the duration of the pandemic, Canadian CRE investors don’t actually have much to worry about. Many commercial retail spaces will need to remain open as they’re necessary for the survival of people under lockdown.
Grocery stores, pharmacies, medical supply shops, and medical offices are understandably receiving higher foot traffic, and this will continue for the duration of COVID-19.
They provide essential products and services, and even if a complete lockdown is ordered, as we’ve seen in countries such as Italy and Spain, and in various cities in both China and the U.S., these retail locations have remained operational.
Regardless of the current situation, the future is bright for retail CRE. Those who invest in retail real estate now stand to receive significant financial benefits. Currently, the costs of buying CRE are lower, and once the pandemic is put under control, retailers will jump at the opportunity to rent out spaces, open up shops, and regain financial stability just like what’s happening in China as many retailers starts to reopen.
It’s expected that shopping at brick-and-mortar locations across Canada will improve to pre-Corona levels; especially restaurants, entertainment venues, gyms and discount retailers. Consumers that are tired of sitting at home will want to go outside, visit their favourite restaurants, eateries, cafes, and shops, and spend time out of the house with their friends and family.
Investing in Canadian retail CRE could offer a big return on investment once the COVID-19 threat has passed. There are already reports analyzing “retail recovery following containment of COVID-19” as China slowly reopens. This confirms that while many around the world are currently experiencing restrictions, it will not last forever, and the future appears to be bright for those wise enough to make strategic investments now. Contact ReDev for insider view of investing in Canadian retail.