London Inc. November 2020 - 18

Upfront Real Estate

" SO MANY PEOPLE ARE
WORKING FROM HOME.
WHAT WE DON'T KNOW IS
WHETHER THIS IS JUST A BLIP
IN TIME OR SIGNALS A LONGTERM CHANGE IN HOW
PEOPLE WORK " -Mark McManus

A MATTER OF
SPECULATION

Retail struggles, warehousing
gains, office unknowns. Questions
cloud the future of the commercial
real estate market
Mark McManus

FALL BROUGHT NOT just a second wave of Covid-19, but
also a second chance for governments across Canada to
ï¬gure out how they would deal with the virus.
Earlier this month, the Ford government came down
on the side of keeping the economy at least limping along,
when it unveiled its new approach to lockdowns. Mass
shutdowns are out in favour of targeted actions - and
only when outbreaks reach a higher threshold than in the
spring.
18 | londonincmagazine.ca | NOVEMBER 2020

Practically speaking, that means masks and physical
distancing are the twin pillars on which many retailers
- restaurants included - will rely this winter to survive.
We've already seen that won't be enough to save everyone,
and it's not clear how much the new policy will help office
landlords.
" So many people are working from home, " says Mark
McManus, a partner with real estate appraisers Valco
Consultants (www.valcoconsultants.com). " That much is
clear when you look at what's happening in offices right
now. What we don't know is whether this is just a blip in
time or signals a long-term change in how people work. "
Like many other observers, McManus assumes companies will look to save money by having more people work
from home, even with the pandemic is over.
" The trend in offices has been wide open spaces, " he
notes. " When people do return to offices, there could
be some major renovations to create private spaces, an
entirely different landscape. "
A third-quarter snapshot of the office and retail sectors
in London noted a slight dip in the vacancy rate, to 15.1
per cent. But the report, by CBRE, warned the relative
good news might simply reï¬ect a lag in the full effect of
pandemic. " We're seeing a ï¬ood of space on the market in
Toronto and Kitchener, " said CBRE vice-president Ted
Overbaugh. " The London market is always slower to react. "
There isn't much data yet to measure the local retail
sector, but the downturn is hard to miss. " Triple-A properties and big boxes are doing fairly well, " says McManus.
" The greatest impact is in secondary locations with local
tenants. Some smaller retail plazas were just locked up in
the spring, so tenants couldn't get in. "
When you pull thousands of people out of offices and
close or restrict other downtown magnets, you severely
choke off the lifeblood of the city's core. When they were
allowed to open after the initial shutdown, many retailers
reported daily customer counts in single digits.
" People want to stay open. It takes a toll on their psyches
to be closed, " McManus says.
New regulations are designed to give those businesses
- and by extension their landlords - a ï¬ghting chance when
the cold weather arrives. When the snow melts, we will see
how successful they were. CHRISTOPHER CLARK

http://www.valcoconsultants.com http://www.londonincmagazine.ca

London Inc. November 2020

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