“We feel that that urbanization trend is going to continue over the long term, but I think we’re going to see a different utilization,” he said. “I think some of the downtown large office properties, skyscrapers are going to take a little longer and require a vaccination, for example, before you see large populations of urbanites getting into elevators and dealing with rush-hour traffic.”
A significant number of commercial properties have become casualties of the pandemic, though Russo said many of those were “pent-up bankruptcies” that were bound to happen at some point. He said retail properties, both high-street and regional malls, will face significant challenges as they contend with an apparently permanent loss of market share to online shopping.
“We’re also starting to see department stores and ‘big box’ stores get converted into fulfilment centres for online retail,” he said. “Maybe a Sears store will die off, but because it’s in the middle of or close to a densely populated area, that Sears box may become an Amazon fulfilment centre. I think you’ll see more creativity with respect to real estate use.”
Another area of particular interest to Timbercreek is self-storage, which has experienced a mixed impact due to COVID-19. E-commerce merchants and small-business owners have increasingly turned to those facilities to store their inventory. On the other hand, it has been traditionally driven partly by mobility –people who change jobs or get divorced, in many cases, need space to move their things into – and that mobility trend has weakened because of lockdown measures and border closings.
“In terms of rent collection, rent collections have actually been tracking fairly well,” said Samuel Sahn, portfolio manager at Timbercreek. “If you fast forward to today and look at the month of July, the month of July is tracking like a non-COVID month with rent collections in the low 90 percent range. And that’s typically what we’ve seen historically. We’ve seen it has improved. And a lot of that is driven by an increase in walk-in customers.”
