Altus Group survey highlights short and long-term impacts of COVID-19 on the office sector

In early June, Altus group surveyed 115 clients and industry partners across the country to monitor the evolution of investors outlook and opinion on the impact of COVID-19.

The company observed Canadian CRE executives from pensions funds & life companies, publicly trade corporations (REITs), private companies, and brokerages to gain invaluable insights on the short and long-term repercussions of COVID-19 on the office sector.

Topics discussed in the Key Assumptions Survey include challenges associated with physical distancing measures, rental relief programs, vacancy and overall sector risks.

In the short term, the survey revealed the timid return to the office will not have too much impact on revenues (except for parking revenues) and the vacancy and bad debts that survey respondents apply to their financial models have not changed significantly between the April and June survey.

However, protocols for returning to the office with physical distancing measures involve more resources for training, security, cleaning and disinfection. Physical distancing, and the resulting additional operating costs, will remain as long as there is no vaccine or no risk of a second wave of COVID-19 cases, and perhaps beyond.

According to the results, the pandemic has unequivocally demonstrated the technological feasibility of working remotely, meaning that more flexible work-from-home policies and satellite offices in the suburbs could gain popularity.

The survey additionally reveals that tenants are currently reviewing office space strategies, but scope of changes and impact will only unfold when leases are renewed. In the longer term, the potential reduction in space requirements associated with the increase in the number of work-from-home workers will be offset by less density per workstation, but it is not yet clear whether the balance will be positive or negative, or in what proportions.