The year 2020 will forever be remembered as a year overwhelmed by uncertainty and disruption.
The real estate industry, like most industries, was significantly impacted by the pandemic, with federal and provincial government shutdowns, physical distancing requirements and regulations adding new and unexpected layers of difficulty.
While some segments of the industry were able to adapt quickly, an overall sense of uneasiness remained as the year came to a close.
Many unknowns surrounding the pandemic’s continued impact on the industry temper the outlook for 2021, despite the approval and administration of vaccines across Canada.
Although we can’t be certain what the future entails, there is value in looking at emerging trends to help Canadians better anticipate what to expect in the coming year.
A look back at “the year that was”
The pandemic impacted many areas of our lives throughout 2020. Every individual, organization and sector felt the consequences in some way.
At the outset of the pandemic, Canadians faced significant disruption to their everyday “normal.” Organizations implemented an abrupt transition to remote work, many brick-and-mortar businesses were required to lock down and individuals turned to virtual sharing platforms to connect with loved ones.
For real estate in particular, the pandemic added a heightened level of uncertainty to an already cyclical residential market.
One result of the new work-from-home mandate was more Canadians trading in properties in major cities for rural or suburban properties. At the same time, commercial real estate experienced both risks and opportunities.
The growing e-commerce boom allowed warehouses and industrial spaces to thrive.
Yet retail was devastated and the movement away from physical office space meant many commercial spaces are now sitting vacant. Even with various government measures, many property owners are faced with the tough decision to sell or attempt to restructure debt to make ends meet.
Looking ahead: Trends on the horizon in 2021
While there is no telling how this year will unfold, it’s important to look at the opportunities and key learnings coming out of 2020 and identify how these can propel the industry forward in 2021.
We’ve captured our predictions for this year’s emerging real estate trends below.
Rise of digitization
The pandemic accelerated the adoption of various technologies in the real estate sector, replacing previously offline or in-person processes with digital options, such as virtual appraisals, remote closings, e-signatures and cloud-based document-sharing.
Digitization of the industry will continue to streamline real estate transactions in 2021 and has the potential to spread into new and exciting areas, including addressing customer experience issues, asset quality and risk compliance.
We also expect to see data play a larger role in predicting trends and assessing potential risk. Through the use of analytics, real estate professionals will be able to better determine portfolio risk, loan eligibility and customize solutions.
Temporary shifts become long-term trends
Many of the shifts that felt temporary last year are likely to become more widely accepted in 2021.
On the commercial side, in the short term we will continue to see an impact on office and retail spaces and many business owners will be forced to make decisions about the properties they lease or own.
However, for those businesses – particularly retail, restaurants and hotels – that can survive the first half of 2021, they are likely to experience renewed growth in the latter half of the year.
Once restrictions have lifted, Canadians, who have been locked down and unable to spend, will be eager to use their saved dollars on travel, events, going to restaurants and shopping at storefronts again.
We also anticipate industrial properties and warehouses will once again come out on top in 2021 as a direct result of continued interest in e-commerce. Many Canadians will likely continue to buy online, even as vaccines are widely distributed and restrictions are eased across the country.
In the residential real estate market, we can expect to see a continued rise in activity in the suburbs and rural areas as a direct reflection of the part-time or full-time remote work plans which are expected to continue throughout 2021 and beyond.
Workplaces will need to adapt to hybrid models long-term and offer more flexibility for employees to both retain and attract top talent.
The intersection of commercial and residential
All of the above trends, along with decisions based on pandemic measures, have various trickle-down effects on the real estate industry.
One of these is the intersection of commercial and residential properties. As real estate continues to transform, we expect to see more consolidation.
Office space, residential property and retail brick-and-mortar locations will be offered in one building, providing consumers with everything they need at their doorstep, as well as providing options for retail and shopping mall owners to build up.
Despite some Canadians moving further from their places of work to take advantage of flexible workplace arrangements, a large portion of the population drawn to the idea of the “15-minute city,” in which access to everything they need is within a 15-minute radius, will remain.
As restrictions loosen, many Canadians, who will have become accustomed to a lifestyle that doesn’t include a commute to work, will support this trend.
Navigating 2021 together
The pandemic has taught us the importance of adaptation and flexibility.
We can expect that many people will be looking to continue their convenient lifestyles.
Now, more than ever, resilience and recovery are defined by the ability to stay ahead of innovative trends in an industry that is fast-moving and undergoing significant transformation.
At FCT, we are committed to remaining at the forefront of these trends and continuing to work with our partners, customers and employees to modernize the real estate industry, while adapting to challenges presented by 2021.