Real estate has been one of the more interesting asset classes during the pandemic. On the one hand, markets such as the GTA and Vancouver have seen residential demand go through the roof, while other areas of the country have dried up. Office spaces that were vibrant, are now quiet and are posing question about the future of tenancy. Meanwhile, areas of the industrial space are booming thanks to the demand for e-commerce, distribution and data centres. Yet while those demands are up, publicly traded REITs are down, making it more difficult for advisors looking to gain exposure to the space.
“We are very strong believes in diversification for portfolios, real estate is similar to other assets where you take different angles to achieve diversification. That tends to be geography, property type and risk strategy,” says Colin Lynch, head of global real estate investments at TD Asset Management. “You can’t predict the nature a shock, but you can construct a portfolio that has the adequate balance, exposure and risk parameters to ensure it performs well in great and tough economic times.”
While some are quick to point fingers at specific sectors underperforming, Lynch says he looks more within the sectors themselves. One area, retail for example, has had positive stories with essential services like groceries and pharmaceutical. Whereas shopping malls were hit hard during the shutdown and could see changes in consumer behavior. “Early indications have been that foot traffic isn’t back to normal levels. People are being more purposeful entering malls, going to a particular store, making a purchase and departing.”
