This two-part series covers the Canadian economy and the commercial real estate asset class selection process. In the first part, the discussion is around how an economic recovery could look like, and whether the right tools are in place to support the recovery. In the second part, the focus shifts to understanding both the micro and macro theme behind secular changes in commercial real estate asset classes, and discusses what types of assets will likely weather the pandemic and outperform over the long-term.
- In the short-term, deep discounts for real estate assets will be undermined by government stimulus.
- Unemployment data understates the depth of the crisis and analyzing actual hours worked is more realistic.
- As the economy reopens, the future expected decline in unemployment will not mirror the rate of increase as some sectors experience demand destruction.
- The pandemic forces consumers to rein in spending, businesses to set aside growth plans, and adopt a wait-and-see approach.
- Well capitalized businesses will adopt risk-on behavior and come out stronger after the pandemic.