Despite increase in year-to-date transaction activity, investors are reassessing their strategies
Published April 2, 2020
As of the end of February 2020, total commercial transaction volumes were up 18%, across Canada compared to 2019. The increase in activity was more of a carryover from transactions that occurred in 2019 but closed in 2020. According to Altus Group’s Investment Trends Survey, in a continued low-interest-rate environment, real estate markets are likely to remain fluid into 2020 as the impact of COVID-19 has investors reassessing portfolio strategies while keeping a cautious outlook. This will likely delay, if not cancel, a few pending transactions for 2020, especially with government policies changing on almost a daily basis and the ongoing discussion of rental deferrals and/or discounts to assist tenants.
It is quite evident that the retail sector will be adversely impacted, with the exception of grocery or food-related retailers. The industrial sector will continue to benefit from e-commerce but may experience a few challenges with labour and logistics, especially if conditions worsen before they get better. We will likely not see the impact of COVID-19 on commercial real estate transactions until we get into at least the second quarter of 2020. Early expectations are that transaction activity will be lower than 2019, but not by much, especially given that 2019 had the second largest level of transaction activity since 2017.