MISSISSAUGA, ONT. – Canadian commercial property investment activity plunged in the second quarter, as investors retreated to the sidelines in response to the COVID-19–induced uncertainty, property firm Morguard reported recently.
The firm’s Q2 2020 update of its Canada Economic Outlook and Market Fundamentals Report identified key factors that impacted commercial real estate markets across the country in the second quarter of 2020 and forecasted investment trends for the second half of the year, stated a release.
Commercial real estate transaction volume dropped 44.2 per cent in the nation’s largest market, the Greater Toronto Area, year-over-year for April and May combined. By asset class, office was down 80.5 per cent, retail 59.4 per cent and multi-suite residential 58.3 per cent while industrial was the only asset class to see sales volume rise, spiking 25.1 per cent, according to Altus Group figures.
“The economic slowdown resulting from the pandemic impacted the commercial real estate sector and investor decisions during the second quarter of 2020,” said Keith Reading, director of research at Morguard, in a statement. “Canada’s economic recovery from the downturn is expected to unfold with a large degree of unevenness in the second half of 2020 as local governments take a phased approach to reopening with caution.”
Many of the transactions completed during the second quarter were negotiated either in late 2019 or prior to the COVID-19 crisis in early 2020. Previously, investment activity had peaked with record high sales recorded for the 2019 calendar year.
Morguard also predicted that Canada’s economic recovery from the COVID-19–driven downturn will be uneven. National GDP was projected to contract between 4.0 and 6.0 per cent on an annualized basis in 2020. Subsequently, output was predicted to advance by between 4.0 and 5.0per cent in 2021, before settling into a moderate annualized growth pattern over the medium term.
British Columbia, Manitoba and New Brunswick are forecasted to recover quicker than other provinces given relatively lower levels of exposure to COVID-19 and earlier economic re-openings. Lower oil prices and global demand are anticipated to hamper progress in Alberta, Saskatchewan, and Newfoundland and Labrador.
Canada’s industrial property sector remained healthy and stable during the second quarter with an increase in demand spurred by e-commerce and related logistics companies.
Recent Comments
comments for this post are closed