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Slow, Measured Recovery
April 2010
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| John O'Bryan, Vice Chairman of CB Richard Ellis Limited |
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By Hayley Mitchell
John O'Bryan is Vice Chairman of CB Richard Ellis Limited, with more than 30 years of experience in the commercial real estate industry, selling in excess of $6 billion worth of commercial real estate across Canada and negotiating over 3 million square feet of leases. He talks to us about the office, retail and industrial sector, from a brokerage point of view, overall saying that things can only get better in 2010 across the board.
“If we’re not past the worst, we’re as close to as bad as it’s going to get,” says O’Bryan, stating that the commercial leasing sector will follow the general economy in a slow, measured recovery that will probably occur over the next 12 to 24 months. Some more problematic markets may take longer, while other markets such as Vancouver and Ottawa, which were barely effected by the recession, are in recovery mode right now.
According to O’Bryan, in the office sector, the “tenant still rules,” in all areas of Canada, with supply and demand relatively balanced.
Retail has been the biggest surprise in Canada through the recession, since most Canadian consumers survived through 2009, versus the consumer levels that dropped off in the United States last year. While 2009 was not a great year, O’Bryan calls it “a very resilient year” for retail, and expects that 2010 will look very much the same. There is good balance it the retail lease sector since it is not oversupplied at the moment.
When it comes to industrial property, the manufacturing decline has had an effect on real estate that’s for lease. Specifically, much of the decline happened in the automotive sector in Ontario, mainly effecting automotive employment and the users of those facilities, but not so much affecting the for-lease numbers, since many of the automotive buildings are owned, not leased. So if you eliminate that declining automotive arena from the industrial picture, things look a bit better. After the first and second quarter of 2009, retailers and manufacturers began to replenish their inventories and continue with far more normalized activity.
In summary, O’Bryan says that 2010 is a year of consolidation and in 2011 we will begin to see more activity. He compares this period in the economy to what occurred in 2000 and 2001 as we came out of the “tech wreck.” He says, “slow measured steps throughout the whole year. I don’t think there will be much excitement in the market, but I think we probably had as much excitement as we needed in 2009.”
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