AFIRE/RICS North America Commercial Property Monitor: Q1 2020

COVID-19 takes its toll on the real estate market

The Q1 2020 AFIRE/RICS North America Commercial Property Monitor results fairly predictably show the spread of the pandemic exerting a significant impact on the real estate market with the key metrics capturing sentiment amongst occupiers and investors moving into negative territory in both the US and Canada. Significantly, concerns regarding the outlook for the economy are visible both in the sharp drop in the tenant demand indicators and as well as in expectations regarding the outlook for rents.

Comments from respondents to the survey underline the uncertainty about the likely extent to the impact of the virus but note amongst other things that some “occupiers are already asking for rent reductions” and that “while the results may be similar to the 2008 financial recession, the effects will create drastic long term changes in the office and retail markets.”

This latter point is clearly visible in the results for twelve month expectations. For the US, the headline number suggests capital values could decline by in excess of 5% over this time horizon (against expectations for a modest increase previously). Significantly the only sectors bucking the negative trend for now, according to the feedback received for the survey, are prime industrial and multifamily. The decline in retail is now projected to be particularly severe, particularly in the secondary space. The results for Canada tell a broadly similar story albeit with slightly less adverse numbers.

The downbeat trend is also reflected in perceptions regarding where markets now stand in the property cycle. For the US, the proportion of contributors seeing viewing real estate in a downturn has jumped to three quarters from just one in six previously. For Canada, the respective number is just over a half. Credit conditions are predictably viewed as deteriorating although the survey suggests that this is more marked in the US.

Reflecting this, international investors appear to have responded to the current environment by turning a little more defensive. A large majority of AFIRE respondents to the survey suggested that they expected to deploy capital disproportionately towards the US over the next year. Click here or below to read the report.


In 2019, AFIRE partnered with the Royal Institution of Chartered Surveyors (RICS), a professional body promoting and enforcing the highest international standards in the valuation, management and development of land, real estate, construction, and infrastructure, to collaborate on research for the organization’s quarterly North America Commercial Property Monitor – part of RICS’ Global Commercial Property Monitors, which serve as leading indicators of conditions in commercial property occupier and investor markets around the world. Click here to learn more.


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