Pandemic creating problems for commercial real estate in Winnipeg
True North Square. (Source: Charles Lefebvre/CTV News)
WINNIPEG -- Though Winnipeg housing sales reached an all-time high during the pandemic, the same cannot be said for commercial real estate.
“Its biggest current impact has been in the retail sector,” said Wayne Johnson, a commercial real estate salesperson.
Commercial real estate can be divided into three sectors: retail, office, and industrial.
Johnson said the pandemic has had very little effect on the industrial sector, and there continues to be a demand for space.
“Both manufacturing and distribution have to carry on and have carried on pretty successfully (in Winnipeg) and I think pretty much everywhere,” he said.
THE OFFICE MARKET
With people working from home, the pandemic has changed the office real estate market, as there are not as many tenants out looking for spaces.
“Still the leases get put in place and they’re usually long-term leases and so the tenant can’t vacate even though they’re not using the majority of the space, they’re still paying for it,” Johnson said.
“They’re still obligated and that still goes on.”
The long-term impact may be different.
Johnson said it won’t be until the leases are over that some tenants will decide whether to scale back and keep some of its workforce at home.
“The office, as the pandemic winds up, will have a modest reduction in space requirements,” Johnson said.
“The businesses are still going on for the most part. Some of those businesses will be able to have their workforce at home and will have a reduced need. Others will continue back with the space they needed previously.”
One example of a company keeping its previous office is SkipTheDishes, which announced in November 2019 it is creating its Canadian headquarters at True North Square.
The plan was to consolidate its teams at the new headquarters by December 2020, while still keeping a second location at 140 Bannatyne Ave. for its 24 hour operations team.
In a statement, a spokesperson from SkipTheDishes said the company still plans to move to the new headquarters once it can safely do so.
“SkipTheDishes is excited to move into our new Canadian headquarters in True North Square,” the statement said.
“While the space is still under construction and our teams continue to work from home, we look forward to bringing our teams together again at the new Skip HQ when it’s safe to do so.”
THE RETAIL MARKET
What the pandemic has really hurt is the retail sector of commercial real estate. This is due to leases ending, bankruptcies, and the inability of some retailers to pay.
Johnson said there have been increased vacancies, as well as difficulties with property owners’ collecting rent.
“While new areas of Winnipeg would still see some retail growth, some buildings being built and occupied, the rest of the marketplace is definitely hurting,” Johnson said, attributing this struggle to the fact that people are moving to an online retail format.
He said there will be no short-term resolution for the retail market and the pandemic’s consequences will continue to play out.
“I think we’re going to continue to see more go bankrupt, yes without question,” Johnson said.
“There’s still more hurt coming to the retail sector.”