By Ori Grad
The current market trends in commercial and restaurant real estate have proven to be truly unique as the hospitality industry continues to be impacted by COVID-19 and as local/provincial legislations maintain strict regulations on hospitality operations.
As a team of hospitality business brokers helping clients buy and sell restaurants and commercial properties, our team has experienced first-hand how the pandemic’s impact on the industry has influenced commercial and restaurant real estate.
The number of calls we have received is a good indication of the current market. At the beginning of the pandemic, the lines were quiet. March 2020 was filled with uncertainty, but this industry is a hugely resilient one. It wasn’t long until the phones started ringing again. By summer, demand had soared with a quickly evolving market and an abundance of qualified buyers ready to invest in the industry.
Demand for commercial and restaurant properties is strong and increasing despite the industry challenges.
With the pandemic creating opportunities that would have never previously existed, some operators nearing retirement age are taking the pandemic as a sign that it’s time to retire. Meanwhile, newcomers are seeing this as an opportunity to invest in hospitality in expectation of a resurgence in the industry post-pandemic.
The high demand for restaurant and commercial properties has also resulted in low inventory for specific types of properties, such as nightclub spaces.
With many offices remaining empty since March 2020, buyers and hospitality operators have shifted their focus to urban and suburban residential areas. Interest in financial districts has languished, while areas with more condo developments and denser populations have seen more market activity. Neighbourhoods experiencing a boom in the condo and housing markets are becoming more desirable, with suburban areas also becoming more favourable with investors.
While a lot of our work has previously been focused on prime downtown Toronto locations, recently listings include a number of properties outside this core, including the Bonaire Golf Club in Simcoe County and the multi-use Riverside Inn in Norland.
There has also been a shift in market trends as a result of restaurant operators adapting to the current climate. As restaurants closed their dining rooms and focused operations on takeout and delivery, there has been significant demand for outdoor space, as well as a considerable increase in demand for quick-service locations under 1,500 square feet that would function largely around takeout/delivery.
As takeout and delivery have become a main source of revenue for Canadian restaurants in the current market, investors are looking for larger spaces that have the capabilities to run ghost kitchens. This is a trend that is becoming more and more popular because of the price of real estate and is a more cost-effective solution for owners.
Although the pandemic presented its fair share of challenges, it also offered opportunity. We’re continuing to take this time to educate and work transparently with clients and partners and navigate the market together.
Ori Grad is Broker and Managing Director of CHI Real Estate Group, which specializes in commercial, investment, and restaurant properties. Over the last 16 years, he has established a reputation for dedication, insight, and professionalism that have made him a trusted advisor to some of the city’s top chefs and restauranteurs. Many of his clients regularly appear in the Top 10 lists of Toronto Life, NOW Magazine, and blogTO. Ori also shares his valuable experience as a landlord for several commercial properties in Toronto to serve and benefit his clients.