The Commercial Leading Indicator, an index from the BC Real Estate Association (BCREA) that tracks economic measures that affect commercial real estate, rose from 144 to 150 in the first quarter of 2021, representing the third consecutive increase as the economy recovered from the COVID-19-induced recession.
Compared to the same time last year, the index was up by 15 per cent.
“Normally, the type of growth reflected in the [index] would imply an improvement in demand for retail and office space. However, the complexities of the pandemic are driving a wedge between what we see in the data and what is being experienced on the ground,” the BCREA noted.
This is a reference to pandemic-induced health and safety restrictions that emptied some office buildings and forced the closure of many retail and service outlets across the province into the first quarter of this year.
A 12 per cent jump in manufacturing activity, largely due to surging demand and prices for wood products, and a 6 per cent increase in wholesale trade activity, were the main contributors from the economic activity component of the index.
“Employment in key commercial real estate sectors such as finance, insurance, real estate and leasing increased by about 13,000 jobs in the first quarter. While the office employment measure is now at an all-time high, it is unclear what the implications are for office space demand given the uncertainty around the near-term outlook for a return to traditional office environment,” the BCREA stated.
The financial component was positive in the first quarter of 2021, as real estate investment trust prices rose to their highest level since the fourth quarter of 2019, according to the BCREA.