Not so long ago, we published an article about the COVID effect on real estate and the recently launched JLL 2021 US and Canada Office Fit Out Guide. In it, Todd Burns, President, Project, and Development Services at JLL, was clear in his prediction - flexibility and choice are key elements in future office planning.
The pandemic has changed where people want to live, work and shop. These changes are, in turn, shifting trends in commercial property management. Small and medium companies, Canada's largest employers, struggle to keep afloat. They rely on flexible and knowledgeable property managers to help keep the stores open. On the other hand, property owners and DIY landlords look to innovative property managers to turn their investments into profit. Property managers are expanding their services, deepening relations, and embracing technology. Here is a look at the pre-pandemic trends and COVID-inspired changes in property management.
Pre-Pandemic Commercial Real Estate Trends in Toronto
Before the pandemic, commercial real estate in Canada was thriving. Our April 2019 issue touched on the MSCI/REALPAC Canada Property Index of 2019. It revealed that investors gained 7.4% growth. Although retail was on a decline, office rentals and industrial spaces experienced record-high performances. Back then, key trends in commercial property management were:
Technology trends like blockchain transactions, machine learning, predictive analytics, and virtual reality were helping property managers become more efficient. But at the same time, property owners were turning to these solutions as an option for DIY.
Investment in commercial real estate focused on cities with large metropolitan areas like Toronto. These areas took the lion’s share of capital at 60%. Along with this, rent prices in these areas sky-rocketed.
Diversity and inclusion were the main focus. Property managers were keen on cultivating teams reflective of the 21st-century workforce.
Some of these trends have not changed. Investors and property owners want their investments to turn a profit. Industrial growth is still on a surge, and technology solutions are oiling the owner-manager-consumer relations. Here is a look at the commercial property management trends in a post covid world.
Commercial property managers are broadening their services
COVID has instigated a rise in the demand for legal compliance, renter solutions, financial solutions, and health maintenance. Therefore commercial property management is more complex due to COVID-19. Operations like lease negotiation, rent collection, maintenance, and leasing have become more complex, and commercial property managers are rising to the occasion. They are providing more than just rent collection, maintenance, and vacancy advertisement services. Some Toronto commercial property management firms even introduced incentives to attract landlords and investors, from free tenant placement to waived fees.
In addition to this, many are acting as legal sounding boards when it comes to current legislation and tenant and landlord rights, digesting moratoria and other government directives on covid containment and renter protections. Investors and landlords are relying on property managers to provide pragmatic compliance strategies while maintaining profitability.
For renters, property managers are providing much-needed information about financial solutions to help businesses keep afloat. Renters are also turning to property managers for extended payment terms and to revise lease terms.
To both renters and landlords, property managers are a crucial liaison point. By expanding their services, property managers enable businesses to continue, and property owners profit amidst the pandemic.
Innovative drives for profitability
Unlike the last storm in the property industry, COVID has shifted the way people do business and use commercial spaces. Some of the significant changes in the commercial real estate spaces include:
- A drop in the demand for accommodation spaces which analysts anticipate to sustain even in a post-COVID world.
- The rapid decline in demand for retail spaces and a growing number of small businesses struggling to maintain operations due to lack of traffic.
- Issuance of moratoria, legal guidelines, and the emergence of government plans to contain the pandemic and cushion individuals and businesses from the economic effects of the pandemic.
Although lenders have granted investors and building owners months of forbearance, the future does not look too promising. Investors are hesitant to put money in new properties, and all are staring at stagnating or dwindling revenues.
Innovative property managers who come up with ways to achieve profitability are a much-needed resource for property owners and investors. Some of the emerging trends to drive profitability include:
- Value-add updates on properties.
- Review of cost models to lower costs. For example, by forming in-house renovation and maintenance teams.
- Repurposing properties: Transforming COVID-hit malls and retail spaces to last-mile distribution warehouses or safe areas for quiet workspaces, homes, schools, and gyms.
To broaden their portfolios, property managers are reaching out to retiring property managers and scouting previously DIY landlords who need property management services.
Enhancing communication with owners and investors
To counter the threat of landlords and property owners turning to apps and software, property managers enhanced interaction with owners, landlords, and investors. Property managers embraced digital platforms for real-time asset monitoring. Property owners and landlords could access financial reports on-demand and real-time reports about vacancy status without going through the property manager.
Technology on the rise
Commercial property management was infamous for the slow adoption of technology, comments professional contractor Fantastic Cleaners. However, in the last five years, the uptake of technology solutions rose. Tech solutions reduced staff time and costs, provided more convenience for renters, and reduced payment times—all of which contributed to the bottom line.
COVID drove property managers to embrace digital solutions. In a post-COVID world, there was a surge in property managers who embraced technologies like virtual property tours and electronic lease signing. These technologies enhanced convenience, safety, and profitability.
Flexibility with staff
As property managers increasingly embrace digital solutions to manage operations, they also adopted remote working solutions for their teams. This turned out to be a great option as more managers report sustained productivity, morale, efficiency, and effectiveness by their teams.
The cost savings and productivity effects of remote working in property management show that the trend is bound to continue growing in the future.
A final word on property management in a COVID world
COVID has shifted the way people do business, where they choose to live, and how we work. In the current issue of the CCR magazine, figures from the industry indicate an improvement in retail spaces and a boom in construction. These trends show enhanced reliance on property managers' services. They will help property managers thrive in a post-COVID world.