Coronavirus: Commercial property can bounce back as stage four lockdown eases

Victoria’s commercial property and business recovery could be swift as stage four lockdown restrictions begin to ease, experts say.

The Victorian Government on Sunday outlined its ‘roadmap’ for reopening the state, which has been in lockdown for almost six weeks in a bid to curb the spread of COVID-19.

As reported on Realcommercial.com.au, while some personal restrictions will be loosened slightly on September 13, it will be weeks and months before many Melbourne businesses, commercial property tenants and landlords begin to return to normal, with restrictions to be eased in a multi-stage process over the coming months.

Under the schedule, major sectors such as retail and hospitality will remain under the current level of restrictions until at least October 26, in a major blow for those businesses and their landlords.

But REA Group chief economist Nerida Conisbee says that while many businesses and property owners will be hurting after already enduring months of forced closures and challenging conditions, those that are able to reopen in the coming months will experience a quick recovery as lockdowns are lifted.

“It’s obviously terrible news. There was an expectation it would be six weeks and things would slowly get back to normal,” Conisbee says.

“The longer this extends the more business failure there will be.”

“But the positive thing is that once we start to see restrictions lift, there will be a sharp rise in activity. There is always a bounceback after these things happen.”

Conisbee points to improvements in retail activity after restrictions were initially lifted in May as a pointer to what commercial property owners and tenants can expect the second time around.

Retail could bounce back quickly as coronavirus lockdowns are lifted.

Conisbee says retail and hospitality in Melbourne’s CBD, which is reportedly experiencing a 90% drop in daily foot traffic, will continue to be among the worst hit sections of the market.

But other sectors will emerge strongly and could be among the most highly sought-after asset classes in the coming years.

“The government sector is going to be growing rapidly over the next few years, so if you’ve got government occupiers you’re going to be in a really good space,” she says.

“It hasn’t morphed into a full-blown financial crisis. The banks are still well-funded, so there’s still stability in the finance sector, which will help. One of the main positives we’re seeing at the moment is what happening in WA – that economy is really booming. China is also back on track so that’s really helping exports.”