The market is now entering the third quarter of 2020, after a very difficult second quarter – so difficult, in fact, that many companies refrained from preparing assessments of the first quarter until the economy began to reopen.
But following a sharp rise in unemployment in the second quarter, the jobs picture is improving. The most recent statistics indicate that seasonally adjusted employment grew 2% in May after three months of losses. Despite those losses, average unemployment in the first five months of the year remains the second lowest in Canada. Restaurants and other businesses, including hotels and resorts, that curtailed operations during the pandemic began to resume normal operations in late May and early June, at least for locals. The cautious approach to reopening that public health officials in BC have taken promises to support business and consumer confidence.
The employment data points to a generally resilient economy, and the potential for BC’s economy to face down the economic fallout from the pandemic. The robust state of the economy in the first quarter is seen in real estate transactions, which were strong before restrictions associated with COVID-19 came into force in mid-March. Transaction volumes were up across all asset classes in the quarter, led by multifamily transactions, up 87.5% from 8 to 15, and industrial, up 25% from 96 to 120.
The dollar value of those sales moved in opposite directions, however. While demand for secure, purpose-built rental assets saw the value of multifamily properties increase 10-fold to $626 million versus the first quarter of 2019, a shortage of large industrial opportunities meant many smaller transactions with an aggregate deal value of just $359 million, 10% lower than a year ago.
Transaction activity in the second quarter was quiet, but interest remained strong as buyers made plans to capitalize on lower interest rates and strategic buying opportunities. This promises to result in strong activity in the third quarter. While activity likely won’t match what we saw in the first quarter, investor interest remains strong for desirable assets.
Given the market turbulence, it’s important to understand the value of your property in today’s market if you’re considering a sale or purchase. While many key fundamentals remain strong, buyers remain strategic. Certain types of properties are seeing stronger demand than others, especially as we gain a better understanding of how COVID19 has changed the operating environment. With our knowledge of the market, we can help you understand the opportunity your property presents to buyers, and the best way to position it for a successful sale.
Transaction activity in the second quarter was quiet, but interest remained strong as buyers made plans to capitalize on lower interest rates and strategic buying opportunities.