Industry’s emerging trends, according to experts.
Every year, PricewaterhouseCoopers (PwC) and Urban Land Institute (ULI) release a report that highlights emerging trends that shape the real estate industry across North America, specifically Canada.
This year, the report focuses on COVID-19 and how it will affect the industry in 2021 by analyzing the changes it caused in 2020.
Below is a snapshot of the key themes unveiled in the report.
The Economy (and Real Estate Sector) Hang On
Through the effects of COVID-19, 2020 has faced an uncertainty period as populations scrambled to adapt to a rapidly changing society. Even though most communities have now adjusted to a new lifestyle and calendars become productive once more, PwC reports that most experts still predict the real estate market to fall anywhere between 5-10% in prices overall.
However, it is believed that “industrial properties, data centers and single-family homes are expected to rise in value, while retail and hospitality will see the largest decline,” states PwC. The mystery rests on the long-term outlook, as it will rely on the global effort to control and stem the virus.
Exodus to the Suburbs
The suburban neighbourhoods have had a sizable increase in growth since the need for health and safety arose. Lower density districts have begun to attract more and more potential home-owners. PwC states that “remote work and higher taxes in large cities due to declining tourism and business tax revenue are contributing to the shift away from an urban core.”
Work from Home Changes Office Outlook
The most notable of changes that have been brought on by COVID-19 has been the sudden shift from office congregating to digital workspaces, with considerable success from companies who implemented it effectively. PwC conducted a study and stated that 94% of professionals in the real estate industry predict that companies will allow at least some form of part-time remote work after global stabilization. PwC also stated that 60% of professionals predict that companies will better comply with the social distancing measures by expanding their office and collaboration spaces.
The Essentials: Safety and Wellness
In the same study above, PwC stated that 82% of professionals predict that safety and wellness will become a larger concern across every aspect of real estate. The need for sanitizing and safety measures are necessary for returning customers and clients, especially in hospitality businesses (hotels, retail, restaurants, etc.).
Due to COVID-19, there is now a large development and focus towards technologies that improve upon HVAC infrastructure, touchless sensors and entries, and sanitation measures.
Social Justice and Racial Equity Now
Referring to the same study, PwC stated that 70% of professionals agree that the real estate industry can improve upon their approach towards racial inequality, specifically “existing job training and recruiting programs for minorities and underserved communities need to be supported and expanded.” PwC also states that there needs to be a push to improve and enhance minority and low-income communities, focusing on housing and schools.
Stores Still Matter
PwC claims that the next few years will be “retail’s great transition period.” The demand for corporate retailers and department stores decrease as the demand for discount stores, online platforms, and quick delivery services skyrocket. The presence of physical stores will decrease, and larger amounts of vacant space will begin appearing. Dominant brands and stores will improve the infrastructure and aesthetics of their locations, while malls and plazas will pitch empty space to improve the quality of their tenant rosters. Alternatively, the vacancies could be converted into distribution centers for companies needing a localized location selling their products online.
Affordable Housing Remains a Major Issue
Due to COVID-19, the acceleration of housing disparities and the rise of unemployment has led to possible evictions and other concerns. Even with the help of the Canadian Emergency Response Benefits for individuals and Rent and Wage Subsidies for businesses, problems still need to be addressed.
The Great Fiscal Challenge
Government revenue is set to decline, as real estate taxes (generally the largest source of local government revenue) is affected by the loss of value in hotels and shopping centers. This could impact infrastructure investments, which in turn impacts the real estate market and other industries further. The National League of Cities predicted in an analysis that 65% of cities would postpone or terminate infrastructure projects due to COVID-19.
The Start of a New Year
The end of the decade brought uncertainty and challenges. The global effort in response to the pandemic has impacted individuals and businesses beyond most could possibly imagine, especially Canadians. We have been pushed to our limits and adapted to every change thrown at us.
Our team at BuyRealty.ca has been working tirelessly to keep our clients’ interests fulfilled and stay on top of the changes that COVID-19 brought. If you ever have any questions about the adjustments being made to the real estate industry or about anything in general, give us a call or send us an email.