Pivoting from a sold-out event space at The Carlu in downtown Toronto to a 600-person Zoom conference call would have been an unthinkable venue change during last year’s Emerging Trends in Real Estate report launch, but by October 2020, it seemed completely natural.

With months of virtual-only events and Zoom calls already behind us, taking a seat in a living room, home work space, or (maybe) mostly empty and sufficiently distanced office to watch the keynote remarks at PwC and ULI’s Emerging Trends in Real Estate 2021 just felt right.

It had been a year like no other, shaped by a global crisis that no one could have predicted in October 2019 when the 2020 Emerging Trends report was presented. The trends that shaped this year — many of which are likely to continue into 2021 — mostly weren’t discussed or were viewed in a very different context by the previous year’s panelists. Terms like “social distancing” and “super-spreading” had yet to enter common parlance.

So it goes without saying that when ULI Toronto Executive Director Richard Joy and Vice Chair, Chair of Mission Advancement Cyndi Rottenberg-Walker welcomed attendees of this year’s event via Zoom, you knew there would be much to discuss.

The virtual event began with a keynote from Andrew Warren, PwC’s Director of Real Estate Research. Warren started by noting that the Emerging Trends report is now in its 42nd year with 2020 being the 16th year of the Canadian edition.

“It was by far the most unique year [of the report],” Warren said.

He acknowledged what’s become somewhat of a truism in analyzing the long-term impact of the pandemic across just about every industry imaginable — the upheaval that the pandemic brought with it has accelerated changes that were already occurring.

“There are new trends, but then there are trends that were already in place that got a tremendous acceleration from [the pandemic],” said Warren.

In the course of assembling the report, Warren and his team asked Canadian real estate professionals about their outlook for the new year. Surprisingly, even after such a volatile and challenging year, 83% of respondents fell into the “good to excellent” sentiment range, the highest reading since 2016.

Warren said that the US version of the survey surfaced a more cautious overall sentiment for 2021, with only 55% falling in the “good to excellent” outlook range. This may have come down to the two countries’ different approaches to handling the pandemic.

“I think it’s a result of [Canadians] seeing things getting back to normal a little faster and being able to transact and do business a little differently,” Warren said.

Another noteworthy takeaway from the PwC survey was that 92% of respondents believed that some changes brought about due to the pandemic will be permanent even after an effective vaccine is widely available.

With this in mind, Warren delved into the best bets for 2021 when it comes to real estate investment portfolio opportunities.

Of course, one of the big winners of the pandemic is ecommerce, as consumers have relied heavily on online shopping and delivery throughout 2020. In the industrial sector, fulfillment and last-mile delivery sites will expand while traditional warehouse properties could see increased demand from adoption of just-in-case inventory methods, Warren said.

As anyone living in the Toronto region knows, demand for single-family housing is surging on the back of low mortgage rates and a shift in buyer preferences toward lower density living. Remote work, Warren said, could make residential development in more distant, yet affordable, locations feasible again.

Multi-family development has suffered through the pandemic, experiencing relatively sluggish sales activity across the new construction and resale markets, especially in urban cores, following the spring lockdown period. This is a result of buyer preferences shifting to lower density housing, immigration to major urban hubs dropping sharply, and international students mostly staying in their home countries for the school year. While Warren said demand may continue to slow into 2021, the sector will remain strong with workforce and low income projects now expected to offer the best opportunities for investment and development.

Office and retail real estate have struggled mightily during the pandemic and the outlook for both remains unclear. The PwC and ULI report said that the success of remote work could reduce the number of employees who return to the office, while persistent health concerns may slow even those who do wish to return.

Although attitudes toward remote work have changed considerably in just a short period, engagement may decline as the period that employees are primarily working remotely continues to be extended. The office will still be relevant in the future, Warren said, but its role may evolve to meet different needs.

On the retail side, Warren said that bankruptcies and store closures will have a major effect on shopping centres, with strong retailers consolidating in the best locations. To be successful, retailers will need to ensure they have the best access to brick-and-mortar stores as well as online formats for consumers. Meanwhile, excess retail real estate may need to be repurposed for a different use.

The local panel spotlight on trends for the Toronto Region followed Warren’s keynote. Miriam Gurza, Managing Director, Real Estate Consulting Leader at PwC moderated the panel, with Renée Gomes, Chief Development Officer and VP, Development at First Gulf; Geoff Smith, CEO of Ellisdon; Allison Wolfe, CFO and EVP, Finance and Strategy at Oxford Properties Group and Raymond Wong, VP, Data Operations at Altus Group participating.

Gurza began by asking the panelists for their perspectives on what the biggest impact of COVID-19 has been on the real estate industry.

First Gulf’s Renée Gomes focused on the critical importance of resiliency being at the forefront of planning and development decisions in our cities.

“Unpredictable, disastrous shocks are going to happen and they’re not all going to be pandemics. It’s not going to be another hundred years before the next disaster happens,” she said.

“In order to have our best shot going forward at responding to these kinds of shocks, we have to pivot toward building truly resilient cities. Prior to COVID, there was a growing awareness but not quite a full understanding of what building resilient systems and communities really means. This is, hopefully, for those of us who are best positioned going forward, going to force us to come to that understanding and make that change,” Gomes continued.

Later in the discussion, panelists expressed a healthy degree of skepticism about the long-term sustainability of widespread remote work. Gurza asked the group whether the seismic shift toward working from home that’s been necessary during the pandemic would extend beyond a time when it’s deemed safe to return to the office again.

“One of the reasons why we’ve been able to effectively work from home is that we’ve had 5, 10, or 15 years of working in the office, building relationships and building culture. We’ve been able to carry that culture and relationship capital through this very challenging period,” said Oxford Properties’ Wolfe.

“However, it’s really hard, if not impossible, to build culture over a Zoom screen,” she continued. “For us, who are later in our careers, we’ve had 20-plus years to be in the trenches and work side-by-side to learn that culture and the trade. When I look at some of the employees we’ve had to onboard during this time, it’s been a very different experience. So the downside is we’re going to have to get out of our track pants, but the good side of going back to the office is we’ll be able to continue building that culture.”

The next segment of the jam packed morning involved four concurrent breakout sessions that each focused on a major real estate sector: retail, office, industrial, and residential.

The Emerging Trends event concluded with a lively and wide-ranging conversation between Aliyah Mohamed, Managing Director, Investment Banking, Real Estate at TD Securities and Jon Love, CEO of KingSett Capital.

Catch up on what you missed.