We may already be at the front of a global recession without seeing all the data. Yet, whatever numbers come out for the first two quarters of 2019, Canada’s tech sector and smart retailers are showing there may be little to fear for well-positioned commercial property owners.
A slow down in US GDP in the fourth quarter of 2018 and ongoing international uncertainty suggests a recession could be on its way to Canada too. Thankfully, we were probably the least affected in the last major global financial crisis and the great recession. Some types of investments and companies may stumble or have to do some quick restructuring, like Sears and Macy’s. However, we clearly have some advantages this time around too. Commercial property owners, in particular, could be far better insulated that you think.
The latest data from Loblaws shows it beating out analysts’ forecasts. In particular, its retail business (its biggest sector) is still growing. Both revenue and net profit rose, thanks to more shoppers at a local retailer and drug stores. Same-store sales are also up. Loblaws has a 1,000 per tech team that has clearly helped, without losing any brick and mortar business.
Service, Service, Service
Real stores with great service will keep on winning and growing. It is perhaps the negligence of other retailers that have taken shoppers for granted that has most led to their demise. However, many companies are stepping up to provide more of what consumers really want. Such as Ikea and its new play in assembling furniture for its customers.
Weed on Amazon
You can buy cannabis online and via Amazon, but that clearly hasn’t slowed down a sprint in opening new pot shops. Amazon may one day have its own prime brand of these stores. Though for now, this trend is evidence that there are some things people just prefer to go to the local shopping plaza for.
Mixing Big Brands & Recession Proof Consumer Items
There are many recession-proof items and stores to be found at local shopping plazas. Candy, alcohol, cosmetics, nail services and tattoos, are all among the famous recession-proof businesses. Walmart, of course, did very well in the last recession, and definitely helped Warren Buffett maintain his wealth through various related investments. Walmart hosts many of these items, but is now also hedging its bets by including big brands so that it can enjoy attracting more customers and take advantage of whichever direction the economy goes.
The word from RENX and the RealCapital conference in Toronto is that technology is likely to take the bite out of any recessionary activity in the economy, and has become the new backbone and fuel for much of the country’s real estate growth. Experts from the conference say thanks to tech tenants demand for space has outstripped supply for the past ten years and means absorption should still remain strong.
Find out how Redev Properties Ltd. is investing now to maximize the opportunities in the current market.