As Real Estate Adapts to COVID-19, any Incentive Helps

Harrison Zivot Vice President Investment and Strategy Ronmor Holdings

During the COVID-19 portion of 2020 in Alberta’s real estate market, Harrison Zivot, vice president, investment and strategy, Ronmor Holdings, hasn’t seen much difference in activity between the primary and secondary markets. What he has seen is activity in certain niche markets. The sought-after Balzac industrial area, for example, is a lot more economical for businesses than the city of Calgary and is driving the growth rate of Airdrie. “There’s a lot more employment now in Balzac and northeast Calgary that is taking away from some residential growth and is giving it to Airdrie,”

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Free daily email newsletters with original stories, curated news, and columns by industry professionals. Zivot says. “We have a site in Airdrie that we just completed about a year or two ago, and that site has been holding up strongly during this time.” Balzac is appealing for new home buyers because it is a little less expensive than Calgary and offers plenty of employment opportunities. It’s also a convenient location from a commuter standpoint. Investors are on the lookout for lower taxes, infrastructure, favourable municipal planning, and anything else that might make a venture more appealing. “Right now, the margins are so skinny on pretty much anything you do that any sort of advantage is going to drive you somewhere,” Zivot says. “If your approval process has more certainty and is faster, your return on your investment is a lot more predictable and that will drive investors, in my opinion.”

Zivot adds that lower property taxes can also make a difference particularly for a big retail developer like Ronmor Holdings. “Property tax is something the tenants end up paying. The landlord will collect gross rent. We’re finding we have a few shopping centres in these secondary markets, and taxes can be sometimes half of the cost in Calgary or Edmonton. That will help a tenant dramatically during these tough times.”

Zivot describes the early days of the pandemic as a time of panic. “It was one of the most difficult circumstances myself and my teammates had dealt with,” he says. “It was scary because no one knew really what was going to happen with this virus and tenants didn’t know if they would ever be able to run their business the same way ever again.”

As much as possible, Ronmor Holdings participated in the Canada Emergency Commercial Rent Assistance (CECRA) program, a program announced in April to help small businesses struggling to pay rent due to the economic effects of the COVID-19 pandemic. “We feel that even though we had to abate 25% of our rent, it was a good investment for our tenants because we’re able to alleviate a lot of their pain,” Zivot says. “I think they were very appreciative that we participated in CECRA, so it improved a lot of our relationships.”