From empty office buildings and work-from-home setups to physically distanced dining, COVID-19 has shaken up the everyday. In the global health pandemic haze, spring came and went, and summer draws to its end as we stare at the calendar in disbelief. For some in the region, COVID-19 has had notable influence on the nine-to-five workday. For essential workers, running to keep up with updated health guidelines and sanitation protocols is the new normal. Though not without unique challenges brought on by COVID-19, real estate in the region is pushing forward and, perhaps to the surprise of many, business is booming.
Wayne William Heine has been in the business for 35 years and is no stranger to challenging markets. A true snowbird, the recreational real estate agent escapes the long winter months in California and returns for the lakefront selling season. While some years in the industry see Realtors fighting against slow markets and intimating interest rates, the challenge for recreational real estate this year is keeping up with demand.
“My first appointment of the year was April 13, and I didn’t get a day off until July. It just kind of kept going. It’s going to be one of our best years out here,” Heine says. “We usually get about eight to 10 Wabamun lakefront sales and this year we have already sold 12 lakefronts at Wabamun and many more at Lac St Anne and Isle Lake, and we are only mid-season!”
Lakefront real estate is a seasonal business, Heine notes around 90 per cent of sales are completed in a six-and-a-half-month span annually; however, business is in bloom and even snowbirds like Heine may be sticking around to brave winter this year. “Our season may not end; it may just continue through.”
Lakefront property isn’t the only market enjoying sunny skies. With historically low interest rates and a welcoming environment for first-time buyers, the residential scene is keeping pace with an evolving market.
Amber Prue, a residential Realtor with Maxwell Realty, notes initial challenges during the beginning stages of the COVID-19 pandemic in the region. While adjustments have been necessary, Realtors have seen a successful spring and summer this year despite COVID-19 challenges.
“Initially, when the pandemic hit us in March the real estate market drastically slowed down. Being a Realtor, I was deemed an essential worker; however, what normally is the busiest time of year for us was put on hold and things such as open houses were no longer permitted,” Prue says. “Once Stage 1 was announced in mid-May, instantly there was a shift in the market and many people who were waiting it out decided now was the time to proceed.”
Prue shares the industry adopted a number of safety protocols for both buyers and sellers, giving those in the market more confidence to dive into real estate again. “Personally, my business has been significantly busier this year versus this same time last year. It is a very positive sign for both buyers and sellers.”
According to Prue, the energy in the residential market can be attributed to low interest rates and a reduced benchmark rate from The Bank of Canada, drawing in a number of first-time home buyers looking to capitalize on current market trends. “It now saves them extra money monthly and also allows for a higher qualifying amount when it comes to mortgages,” Prue says. “I have dealt with so many excited first-time buyers lately and that has been the highlight of this all.”
While residential and recreational markets take hold of the real estate boom, commercial faces off against its own challenges. Business closures, whether temporary or permanent, have investors re-evaluating purchasing habits.
“The early stages of COVID-19 caused a number of companies to put plans on hold, resulting in a very slow market across all asset classes,” Chad Griffiths, partner and associate broker for NAI Commercial Real Estate says. “As government stimulus and bank deferrals were announced in rapid succession, however, we saw a general increase in activity as many of the companies who had put plans on hold re-entered the market.”
With many companies adopting work-from-home policies, Griffiths notes the office market has been particularly “sluggish,” but the Edmonton-based broker does not expect the trend to become permanent. “There will undoubtedly be some segment of the workforce that transitions to home offices, but I still expect many employees to return to the office in due course.”
For those in the retail world, COVID-19 has not been kind and many non-essential businesses who found themselves closed for weeks on end are in penny-pinching positions. “Retail can be divided into two categories: essential and non-essential services. Many in the former category have fared well during COVID-19, whereas those in the latter have faced tremendous pressure,” Griffiths notes. “While most non-essential businesses have now re-opened, those who have had little to no revenue for months have depleted their rainy-day funds and are now in precarious positions.”
Griffiths acknowledges the current environment has not been easy on the commercial market, but is optimistic about the future of the industry in the region. “Fortunately, a lot of these businesses were able to access government programs and/or rent deferrals to ease the pain. There is also recent data indicating Albertans are spending more than pre-COVID levels. It might still be a difficult fall for some retailers, but there is a collective effort to help as many as possible stay afloat.”
The commercial market has its fair share of challenges in the current environment but with tough times also come opportunities. “For those looking to purchase a commercial property, I would advise they take an in-depth look into any of the existing tenancies and evaluate what the market lease rate will be if the lease is coming up for renewal or in the unfortunate event of a default. If the lease rate in place is higher than the market, it may result in less rental income if the building has to be re-leased,” Griffiths notes. “Conversely, if a property is being leased at a lower rate, there may be an opportunity to purchase it and lease it at a higher rate when the economy recovers.”
While COVID-19 presents its fair share of uncertainties, the real estate industry continues up and onward. As the region responds and pivots to evolving circumstances, new obstacles are sure to appear, but as industry leaders like Prue demonstrate, adaptability and perseverance are the foundations for a robust real estate industry. “In the end, I believe the real estate market will continue on this healthy and busy path if we all continue to do our part. With the Government of Alberta’s direction, our associations and our brokerages policies, we can adjust the way we do business and still confidently keep our buyers and sellers safe.”