Real Estate Investment Returns To Pre-covid Levels

August 31, 2021 5 Minute Read

BOC Confident In Its Economic Outlook


  • Employment grew by 94,000 jobs in July 2021 with the unemployment rate falling to 7.5%.
  • Inflation rose to 3.7% in July 2021, the fastest pace seen since 2011.
  • Retail sales grew by 4.2% in June 2021 as restrictions eased across the country. However, preliminary estimates call for a 1.7% reversal in July.



The Federal Reserve has given its clearest indication yet that the major central bank will likely start tapering its quantitative easing program some time in the next few months. After 17 months of injecting emergency stimulus into the U.S. economy, the Federal Reserve has seen substantial progress towards their inflation and labour market objectives to meet the necessary preconditions to start unwinding stimulus. With interest rate hikes being the natural next step following tapering, the Federal Reserve was quick to emphasize that tapering did not mean interest rate increases were imminent. The central bank stressed that the criteria for raising rates followed a “different and substantially more stringent test”, focusing on the additional progress still needed to reach maximum employment.

The consistent reassurance that interest rates will stay low for now amid the economic rebound further strengthens the attractiveness of commercial real estate investment. Investor demand has returned to pre-pandemic levels in the Americas as evidenced by the surge in investment volumes tracked by CBRE in Q2 2021. After a soft first quarter, investment volumes in the Americas rose by 161% year-over-year in Q2 to US$136.5 billion. Capital continued to flow primarily to industrial and multifamily assets, accounting for nearly 60% of Q2 total volumes. While office and retail investment represented a lower share of total volumes relative to their pre-pandemic levels, investors are still deploying capital into these sectors with a focus on core assets.

For the office sector in particular, its future has become a bit clearer as a growing list of major Canadian occupiers have announced either vaccine or testing mandates for their employees. Starting with the vaccine mandate implemented by the Canadian federal government, this paved the way for many companies to follow suit. The five largest Canadian banks have all announced similar vaccine mandates, with accommodations for employees with specific issues, and a common deadline of October 31st. Afterwards, the banks are expecting employees to work two to four days a week at offices with flexible options for the other days. While the delta virus variant has delayed many companies’ return to the office, the proliferation of health mandates is bringing optimism for a swifter end to the pandemic.



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