What a Return to Work Means for Commercial Real Estate - Modern Family Realtor

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What a Return to Work Means for Commercial Real Estate

When the stay at home order was issued in the middle of March 2020, in response to the growing COVID-19 pandemic, formerly bustling office buildings and retail spaces went seemingly silent overnight. And on the other hand, distribution centres became swarms of activity, responding to never-before-seen demand in delivered products. Articles bemoaned the end of brick-and-mortar shopping and called for a permanent shift to working from home– with some big companies like Shopify declaring their entire workforces remote . But, over a year and a half into the pandemic, are we starting to see a shift “back to business”?

Altus Group’s VP of Data Operations Ray Wong joined TRREB Chief Market Analyst Jason Mercer to discuss the return to work on a recent episode of the Ready to Real Estate Podcast . With 30 years’ experience in commercial real estate, Ray shared observed trends – and reverse-trends – in the business, retail, and distribution sectors. 

Business

The pandemic spurred a re-examination of existing business practices, not least the tradition of workers heading into a physical office Monday to Friday, nine to five. Near the start of the quarantine, KPMG revealed that 70 per cent of surveyed companies would downsize their office space. Conducting the survey again in spring 2021, however, saw that number go down to just 17 per cent.

“It’s not as big as we thought,” says Ray, but notes that there’s much more flexibility in what a return to work looks like for valued employees who have grown to appreciate working-from-home. Even if office spaces stay the same size, they won’t necessarily be operating at full capacity as they once did, opting instead for rotating shifts of employees.

Retail

As Jason notes, the pandemic also inspired a shift in consumer behaviour towards ordering online for all kinds of products, especially groceries. Retailers were quick to adapt to the delivery-reliant COVID-19 customer, but there were challenges to upselling that come naturally to browsing environments – people are less likely to impulse buy online.

With a potential full reopening in Ontario by spring 2022, Ray anticipates that – like returning to the office – there will have to be a reason why consumers will visit a physical retail space. Retailers will focus on providing an experience that’s more services based. Adds Jason, “more boutique.” 

Ray also notes that there’s been an increase in retail investment activity, due to the excellent locations of available retail spaces. As land is redeveloped into mixed-use, those retail spaces will be developed alongside office and residential spaces to form “main-street” style communities – not unlike the new Vaughan Metropolitan Centre, conveniently abutted by the TTC subway.

Industrial

Much as the employment sector saw a blurred line between home and office, the industrial sector began to blur with its retail counterparts to meet increased shipping demands during the pandemic. A squeeze on global shipping and local transportation, as well as rising costs of gas and packing materials means that retail locations also serve as secondary distribution centres – Jason and Ray use the example of Amazon using its Whole Foods stores to help service customers in urban areas.

Consumer expectations have also shifted towards the immediate when it comes to deliveries; one to two days is increasingly becoming the shipping standard. However, Ray notes that this could shift as people return to work and aren’t necessarily home to receive packages every day.

For more insights from Jason and Ray’s chat about the move back to business, including a discussion of the multi-residential sector, check out the full episode .

The post What a Return to Work Means for Commercial Real Estate appeared first on TRREB Wire .

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