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Subsidized Wages for Businesses Benefits Commercial Real Estate During Pandemic

Published April 21, 2020 by Real Estate Leads

It’s inevitable that with the economic slowdown related to COVID-19 the real estate market in Canada is going to have a downturn of its own. Residential real estate is already seeing this affect and it’s going to be a situation where many property owners who would have considered putting their home on the market are now going to be wise about it and put that on hold. Then of course demand will shrink somewhat as well as some buyers who might have been qualified are now not.

Consider as well that new building starts will be decreasing as well. As will the investor market as the entire world feels the crunch now and post-pandemic – hopefully that coming as soon as possible.

Consider as well that new building starts will be decreasing as well. As will the investor market as the entire world feels the crunch now and post-pandemic – hopefully that coming as soon as possible.

The Federal Liberal Government’s recent wage subsidization measures stand to benefit the commercial real estate market though. Wage relief is being delivered, with the government covering up to 75% of payroll costs at impacted businesses. Subsidized wages do help, but another very large and expensive still needs to be considered, and that’s the rent for business owners renting or leasing commercial space.

Commercial real estate is a focus for many realtors in Canada, and real estate services of all types are looking to become a whole lot more competitive in the near future as inventories decrease. Our online real estate lead generation system here at Real Estate Leads is a proven effective way for realtors to get more focused results from their client prospecting efforts, and it’s recommended for new realtors or ones who’ve been in the business for a while.

But back to topic – Commercial real estate is going to be positively impacted by the Government’s Canadian Emergency Commercial Rent Assistance Program  (CECRAP), and that’s some good news for the industry in general in Canada.

Canadian Emergency Commercial Rent Assistance Program

It still remains to be soon as to how the program is going to be delivered, but here’s a few of the details that can be shred. This is going to apply to landlords providing rent incentives to small businesses and relief will come in the form of a loan, some of which will be classified as ‘forgivable’ loans. There may be differences between provinces, since they’ll be delivering the relief individually.

The repayable ones would be similar to the relief homeowners are currently receiving. Which helps them defer most of their fixed costs for a few months. With that breathing room the business is better poised to retain staff and wait this out, and be better positioned for economic recovery. Then they can repay the cash incrementally.

The forgivable loans, or portion of the loans, would look much the same as the Canada Emergency Business Account. In that program, the government will forgive up to $10,000 on a $40,000 loan.

Now whether or not that’s enough to ‘float the boat’ until the economy gets back on its feet and the real estate market stabilizes along with it is that we experience a V-shaped recovery. Now of course we’re not economists here, but reading what we have we’ve seen very reputable ones on both sides of the argument. But the fact that this CECRAP program will be a positive buoy for commercial real estate is good news

Farther Reaching Benefits

If we look at this on a more macro- level too the fact that this will make it more feasible for business owners to retain staff (along with the possibility of paid internal training workshops online during this time-off from being in the workplace) and that has bigger-picture benefits in that this will keep some percentage of the workforce gainfully employed still and allow them to contribute their part of the economic input, including in the real estate market.

If there’s even just a hundred or so more home coming onto the market in Canada – or an equal number of households continuing to be able to be active in the market as their needs dictate – that is an overall advantage for the entire real estate industry at this time. For both residential and commercial real estate.

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