As a result of the coronavirus pandemic, the commercial real estate industry has been struggling to make ends meet while adhering to ever-changing health regulations. According to a recent Colliers Canada survey which sampled 445 various-sized tenants across the country, both retail and office tenants have been significantly impacted since the implementation of economic lockdowns and strict stay-at-home orders.
The report found that of the 148 retail tenants sampled, 93% are anticipating an increase in overhead costs as a result of adhering to government health regulations, while another 10% said they are planning to close down their business. Furthermore, 37% of tenants are expecting to have approximately 75% of their workforce back before the end of summer, while 74% of retailers are currently exploring additional sales avenues such as online sales. This comes amid many retail tenants expecting revenues to only reach 45% of 2019 sales revenue.
Out of the 163 office tenants that were surveyed, 47% are expecting a reduction in office space not only due to a decrease in employee numbers, but also because many employees have opted to work from home. As a result, 64% of office tenants are in the working of redesigning their businesses, while 41% said they have been actively investing in technology to adapt to changing times. However, survey respondents have also noticed that productivity has fallen by approximately 22% since employees have been working from home.
Information for this briefing was found via Colliers Canada and Newswire. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.