Becoming fit for growth: Lessons learned from COVID-19 in BC real estate
March 18, 2021
John Bunting, Partner, BC Region Real Estate Leader
Edward Matley, Partner, Risk Assurance Services, PwC Canada
While BC real estate companies are still navigating the impacts of the COVID-19 pandemic, this is an ideal time to reflect on lessons learned so far. At the start of the pandemic, many companies—out of sheer necessity—set up remote workforces, deployed new technology for virtual collaboration and sought out local suppliers and manufacturers; some had to completely reimagine the way they conducted business, such as selling property through virtual open houses. So, this year, rather than trying to get back to “normal,” BC real estate companies have an opportunity to become fit to grow in 2021 and beyond. Now is the time to create a plan for future resiliency, while also focusing on new opportunities emerging from major global disruption.
One of the common themes in our 2021 Emerging Trends in Real Estate report was an acceleration of existing trends, spurred by the global pandemic. This year, success will be determined by strategies that help companies be resilient in the face of uncertainty while uncovering new opportunities. As one of our interviewees put it: “Our mission ... is to find potential where no one else even looks. So with COVID-19, we were able to use this time as an opportunity to see how we can pivot our business and emerge stronger.”
Why resilience matters
In Vancouver real estate, as in most industries, there have been both winners and losers. Some sectors have been hit hard, such as store-front retail and hospitality. According to Colliers’ recent year-end overview and outlook report, retail rents declined moderately in 2020 and are projected to fall significantly this year before stabilizing in 2022. Others sectors have been strong, such as industrial real estate and assets that support distribution and last-mile delivery. Vancouver’s industrial market activity accelerated at the end of 2020, with CBRE reporting its availability rate fell to 2.3% in Q4 2020 from 2.8% in Q3. The BC construction industry was identified as an essential service and has stayed buoyant.
Notwithstanding the impact on the organization—whether responding to a significant downturn, pivoting to new operating models or taking advantage of strength and significant new available liquidity—those with good resilience practices were most successful. Business continuity and crisis management plans and processes can help companies bounce back faster from disruptive events, as well as maintain control of their business and stakeholder communication. It can also help them stay profitable.
With a vaccine rollout underway and hope for a return to some sort of normalcy in the latter half of this year, it’s a good time to reflect on how your organization has handled the pandemic. Typically, when organizations experience a major disruptive incident, such as an earthquake, flood or cyberattack, they try to put it behind them as quickly as possible and get back to ‘normal.’ They often forget to document the lessons they’ve observed.
By going through this process now—rather than post-pandemic—you’ll be better prepared to respond to crises in the future, rather than starting from scratch. Consider how you can take advantage of your response to COVID-19 and apply that to other types of events that may affect the province, whether that’s a major earthquake, a cyber incident or even another or continuing global pandemic. But also consider what business opportunities are arising through disruption.
Embracing new opportunities
COVID-19 has caused loss and disruption in the BC real estate industry. But it has also provided an opportunity to reposition real estate portfolios and redevelop properties to adapt to these changes, such as redeveloping empty office space to fulfill the growing need for industrial development. Newer players also have a window to get into Vancouver’s competitive real estate market.
Take this time to step back and do some creative thinking about the challenges you’ve faced since the start of the pandemic and consider whether any opportunities can come out of this. For example, the travel industry has been hit hard by COVID-19, but one hotel chain decided to look for new opportunities, such as using its car parks to help essential workers and leasing rooftops to cell service providers for 5G antennas.
Resiliency isn’t just about survival. It’s about leveraging whatever situation comes your way. Some of our BC real estate businesses are busier than ever during the pandemic, making record profits. This is also an opportunity to find ways to build on that success.
What should your company be doing next to make sure you’re capturing value?
- Formalize crisis management structures: How well were you able to mobilize, stabilize and strategize during the crisis? Take advantage of this time to clarify and document what you learned through that process—so next time there’s a crisis, you’ll be able to pivot more smoothly. And there could be strategic or competitive opportunities for those who act now.
- Build business continuity plans: The initial focus at the start of the pandemic was working on the loss of the workplace. But this could, in turn, form the basis of an all-hazards plan that would cover loss of people (ie. work stoppage), technology (ie. from a cyber incident) or a critical vendor (ie. if a contractor goes under).
- Process optimization: Many organizations turned to online collaboration platforms at the start of the pandemic but, a year later, still only use them for video conferencing rather than leveraging the full suite of collaboration tools. Look for opportunities to optimize your processes, workflows and technologies, such as the approval of payments and signing of documents, and take full advantage of the functionality of your collaboration software. Also, consider whether you have the right people and right skills sets for the workforce of the future.
- Look for distressed assets: Some organizations have had to sell all or part of their business during the pandemic. For investors, this provides an opportunity to invest in overlooked or previously unavailable opportunities in the market. But it isn’t just about finding a bargain, but rather identifying the right fit and mitigating risk in a wide spectrum of outcomes.
Now’s the time to get fit for growth
There’s still a significant degree of uncertainty around the pandemic and segments of the real estate market like offices and the longer-term impacts of work-from-home. But it’s also an ideal time to prepare for future crises—and you don’t have to wait until after the pandemic for this process to have value and identify lessons learned.
By building on your experience during COVID-19, you can ensure your organization will be more resilient to future events and fit for growth in the year to come. To discuss the challenges you’re facing and how you can best prepare for the future, please reach out to us.
Contact us
