Pandemic Recovery: Have Downtowns Bounced Back?
As we continue on our journey towards recovery from the impacts of the pandemic, North American offices that sat empty for months have started to welcome back in-person workers.
This small step towards normalcy has sparked questions around the future of office life—will office culture eventually bounce back to pre-pandemic levels, or is remote work here to stay?
It’s impossible to predict the future, but one way to gauge the current state of office life is by looking at foot traffic across city centers in North America. This graphic measures just that, using data from Avison Young.
Change in Downtown Office Traffic
According to the data, which measures foot traffic in major office buildings in 23 different metropolitan hubs across North America, remains drastically below pre-pandemic levels.
Across all major cities included in the index, average weekday visitor volume has fallen by 73.7% since the early months of 2020. Here’s a look at each individual city’s change in foot traffic, from March 2, 2020 to Oct 11, 2021:
|City||Country||Change in Foot Traffic|
|San Francisco Peninsula||🇺🇸||-70.00%|
The Canadian city of Calgary is a somewhat unique case. On one hand, foot traffic has bounced back stronger than many other downtowns across North America. On the other hand, the city has one of the highest commercial vacancy rates in North America, and there are existential questions about what comes next for the city.
Interestingly, a number of cities with a high proportion of tech jobs, such as Austin, Boston, and San Francisco bounced back the strongest post-pandemic. Of course, there is one noteworthy exception to that rule.
A Tale of Two Cities
Silicon Valley has experienced one of the most significant drops in foot traffic, at -82.6%. Tech as an industry has seen one of the largest increases in remote work, as Bay Area workers look to escape high commuter traffic and high living expenses. A recent survey found that 53% of tech workers in the region said they are considering moving, with housing costs being the primary reason most respondents cited.
Meanwhile, in a very different part of North America, another city is experienced a sluggish rebound in foot traffic, but for very different reasons. Ottawa, Canada’s capital, is facing empty streets and struggling small businesses that rely on the droves of government workers that used to commute to downtown offices. Unlike Silicon Valley, where tech workers are taking advantage of flexible work options, many federal workers in Ottawa are still working from home without a clear plan on returning to the workplace.
It’s also worth noting that these two cities are home to a lot of single-occupant office buildings, which is a focus of this data set.
Some Businesses Remain Hopeful
Despite a slow return to office life, some employers are snapping up commercial office space in preparation for a potential mass return to the office.
Back in March 2021, Google announced it was planning to spend over $7 billion on U.S. office space and data centers. The tech giant held true to its promise—in September, Google purchased a Manhattan commercial building for $2.1 billion.
Other tech companies like Alphabet and Facebook have also been growing their office spaces throughout the pandemic. In August 2021, Amazon leased new office space in six major U.S. cities, and in September 2020, Facebook bought a 400,000 square foot complex in Bellevue, Washington.
Will More Employees Return or Stay Remote?
It’s important to note that we’re still in the midst of pandemic recovery, which means the jury’s still out on what our post-pandemic world will look like.
Will different cities and industries eventually recover in different ways, or are we approaching the realities of “new normal” foot traffic in North American city centers?
The World’s Largest Real Estate Investment Trusts (REITs)
Real estate investment trusts (REITS) are a simple alternative for investors looking to gain exposure to real estate.
The World’s Largest Real Estate Investment Trusts (REITs)
Real estate is widely regarded as an attractive asset class for investors.
This is because it offers several benefits like diversification (due to less correlation with stocks), monthly income, and protection from inflation. The latter is known as “inflation hedging”, and stems from real estate’s tendency to appreciate during periods of rising prices.
Affordability, of course, is a major barrier to investing in most real estate. Property markets around the world have reached bubble territory, making it incredibly difficult for people to get their foot in the door.
Thankfully, there are easier ways of gaining exposure. One of these is purchasing shares in a real estate investment trust (REIT), a type of company that owns and operates income-producing real estate, and is most often publicly-traded.
What Qualifies as REIT?
To qualify as a REIT in the U.S., a company must meet several criteria:
- Invest at least 75% of assets in real estate, cash , or U.S. Treasuries
- Derive at least 75% of gross income from rents, interest on mortgages, or real estate sales
- Pay at least 90% of taxable income in the form of shareholder dividends
- Be a taxable corporation
- Be managed by a board of directors or trustees
- Have at least 100 shareholders after one year of operations
- Have no more than half its shares held by five or fewer people
Investing in a REIT is similar to purchasing shares of any other publicly-traded company. There are also exchange-traded funds (ETFs) and mutual funds which may hold a basket of REITs. Lastly, note that some REITs are private, meaning they aren’t traded on stock exchanges.
The Top 10 by Market Cap
Here are the world’s 10 largest publicly-traded REITs, as of March 25, 2022.
|REIT||Market Cap||Dividend Yield||Property Type|
|Prologis (NYSE: PLD)||$116.4B||2.03%||Industrial|
|American Tower (NYSE: AMT)||$109.8B||2.38%||Communications|
|Crown Castle (NYSE: CCI||$76.8B||3.35%||Communications|
|Public Storage (NYSE: PSA)||$65.9B||2.14%||Self-storage|
|Equinix (NYSE: EQIX)||$64.4B||1.74%||Data centers|
|Simon Property Group (NYSE: SPG)||$48.9B||5.07%||Malls|
|Welltower (NYSE: WELL)||$43.0B||2.58%||Healthcare|
|Digital Realty (NYSE: DLR)||$40.1B||3.55%||Data centers|
|Realty Income (NYSE: O)||$40.1B||4.44%||Commercial|
|AvalonBay Communities (NYSE: AVB)||$34.6B||2.62%||Residential|
As shown above, REITs focus on different sectors of the market. Understanding their differences is an important step to consider before making an investment.
For example, Prologis manages the world’s largest portfolio of logistics real estate. This includes warehouses, distribution centers, and other supply chain facilities around the globe. It’s reasonable to assume that this REIT would benefit from further growth in ecommerce—more on this near the end.
Realty Income, on the other hand, owns a portfolio of over 11,100 commercial real estate properties in the U.S. and Europe. It rents these properties out to major brands like Walgreens and 7-Eleven, which together account for 8.1% of the REIT’s annual income.
More Than Just Buildings
Cell towers and data centers may not seem like “real estate”, but they are both critical pieces of modern infrastructure that take up land.
REITs that focus on these sectors include American Tower and Crown Castle, which own wireless communications assets in the U.S. and abroad. They are likely to benefit from the increased adoption of 5G networks and the Internet of Things (IoT).
On the other hand, Equinix and Digital Realty are focused on data centers, a fast growing industry that is benefitting from digitalization. Both of these REITs work with major tech firms such as Amazon and Google.
Trends to Watch
The demand for real estate can be heavily influenced by overarching trends found around the world. One of these is population growth and urbanization, which has drastically pushed up the cost of housing in many cities around the world.
There’s also the rising prevalence of ecommerce, which has triggered a boom in demand for warehouse space. This is best captured by Amazon’s massive growth during the COVID-19 pandemic, during which the company doubled the number of its warehouse facilities.
Globally, ecommerce accounts for just 19.6% of total retail sales. Should that figure continue to rise, industrial real estate prices could be in store for robust, long-term growth.
Walmart Owns Most of the Supermarkets in Mexico
Walmart’s presence in Mexico is dominant, with over 2,700 stores. How does their store count compare to companies in the region?
Walmart Owns Most of the Supermarkets in Mexico
The U.S. and Mexico have influenced each other in many ways over the course of their history, through both the exchange of culture and the cross-border trade of goods and services. One lesser-known area of overlap between the two nations? Supermarket ownership.
This graphic from Latinometrics ranks supermarket popularity in Mexico by tallying the number of locations per chain, and showing who owns those brands.
Mexico’s Relationship with Walmart
When it comes to supermarkets in Mexico, no single company comes close to matching the reach of Walmart. Also the world’s largest company by revenue, Walmart has over 2,700 stores in the country, including chains it owns such as Sam’s Club and Bodega Aurrera. The latter is both the largest supermarket within the Walmart category, and also the most popular in Mexico.
Bodega Aurrera was first established in the 1970s, two decades before Walmart entered Mexico’s market directly in 1991. The discount store now has some 2,000 locations across the country.
In fact, it’s almost safe to say that Mexico is Walmart’s second home. After the U.S., which has just over 5,000 stores, the greatest number of Walmart stores reside in Mexico. But on a per capita basis, there are more Walmart-owned stores in Mexico. Specifically, there is about one Walmart-owned store per 47,000 Mexicans, compared to 62,000 for Americans.
|Country||Number of Walmart Stores|
Source: Walmart.com, Statista (International figures, January 2022), *Japan/UK figures from January 2021
The company’s presence in Mexico is so strong that Walmart’s Mexico division trades separately on the Bolsa Mexicana de Valores (BMV) under the name Walmex. In March of 2022, Walmex had a market cap above 1.3 trillion pesos, or $64 billion.
Supermarkets in Mexico by Revenue Market Share
Overall, with the thousands of stores that they operate, Walmart’s revenue in Mexico gives it a 68% market share within the country’s supermarket industry.
Other American grocery retailers to make the list include H-E-B, a San Antonio-based chain with stores in northeast Mexico, and Costco, which opened its first Mexican location in 1992 as Price Club (before the companies merged).
Sorianna, the next biggest supermarket operator, holds about 15% of the industry’s market share. It is joined by Chedraui, Casa Ley, La Comer, and Alsuper as Mexico’s biggest domestic grocery chains, with some of them also extending their reach into the Southwest United States.
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