Amongst the many industries devastated by the coronavirus pandemic is global travel and tourism. In Canada alone, the hotel industry has experienced a 90 per cent drop in revenue since March, as occupancy plummeted to less than 5 percent, according to the Altus Group. Another market that’s been hit hard is seniors housing, including nursing homes and retirement communities, with roughly 80 percent of Canada’s deaths from COVID-19 linked to the seniors housing industry. These figures bode ill for anyone invested in assets catering or linked to the tourism and seniors housing sectors. Finally, Canada’s office segment is in the midst of a major shift, as working from home becomes increasingly commonplace and existing office settings requiring significant retrofitting to keep up with amended standards for health and safety.

On the other hand, demand for multi-family housing remains strong and shows signs of further growth, thanks to factors such as Canada’s pro-immigration stance and promising socioeconomic conditions in many up-and-coming submarkets.

These two extremes (the present and future uncertainty in the realms of tourism, seniors housing, and offices, and the growing demand for multi-family supply) has engendered something of a solution: reconfiguring the former, lesser-performing supplies into multi-family housing.

This article explains the impact of COVID-19 on the four aforementioned sectors, as well as the specific factors that make for multi-family potential.


Quick facts

  • In Canada, less than 50 percent of hotels are able to open during peak travel summer months. This is due to less people travelling for pleasure, less business travel, and the ongoing effects of COVID-19.
  • Also due to COVID-19, the seniors housing sector is experiencing including labour shortages, rising costs of labour and operations, rising liability insurance premiums, new retrofitting needs, reputational risks, and decreased profitability. This is leading to financialization in the sector, which financial operators account for approximately 30 percent of beds in Ontario.
  • In order to stay operational, many office buildings must undergo renovations to accommodate the new status quo, ensued by COVID-19. There is also less demand for office spaces, as an increasing number of workers transition to working from home.
  • Meanwhile, there is a steady demand for multi-family housing. Converting hotel, seniors housing, and office assets into multi-family accommodations poses a solution to underperforming assets and the undersupplied multi-family segment.


Faltering demand for hotel accommodations

In Canada, fewer than 50 percent of hotels are able to open during peak travel summer months, owing to the impacts of COVID-19 on the sector. This steep decline in the business may seem sudden, but it’s actually a long time coming.

The hotel-conversion movement actually predates the pandemic. It even precedes the direct competition posed by Airbnb. In fact, the multi-family potential of hotels has been realized over the course of the past decade, as multi-family developers have faced a continual shortage of prime land. As such, hotels became key contenders for redevelopment and repositioning.

Fast forward to today, and the hotel industry is suffering—not only because fewer people are travelling for pleasure, but also because video conferencing and virtual meeting apps are posing viable alternatives to business travel. From the vantage point of hotel owners and operators, the absence of the crucial revenue from travel of all kinds is an indisputable threat to their long-term operations.


Setbacks in the business of seniors housing

Due to the onslaught of COVID-19, seniors housing is experiencing a fresh batch of pressures, including labour shortages, rising costs of labour and operations, rising liability insurance premiums, new retrofitting needs, reputational risks, and decreased profitability. The result here is an uptick of financialization within the sector. In Ontario, financial operators—including REITs, private equity, and institutions—account for approximately 30 percent of beds. And that number is rising, as existing operators struggle to address and fund daily operating challenges.


Changes to the nature of office work

The office market has been permanently altered by the pandemic on many levels. In one sense, increased instances of telecommuting have affected where people are buying and renting properties, as well as what they expect from those properties. As for the office settings that are still in use, many have to undergo (oftentimes costly) renovations in order to future proof, such as improvements to HVAC systems, changes to layouts, and the implementation of automation. In some cases (for instance, older Class B and C buildings), the investment needed to bring properties up to spec may conflict with the worth of the building itself.

The worth of older office buildings is further challenged by the fact that more modern and sustainable Class A buildings are in the works. In Toronto alone, over 10 million square feet in new office buildings are slated for construction over the next few years, according to CoStar Group Inc.


Steady demand for multi-family housing

In spite of the pandemic, the need for housing has remained strong, which has directly fed into the demand for multi-family accommodations (including affordable, market rental, and student housing), all over the GTA. For instance, Niagara is in the midst of a significant rental shortage. Meanwhile, Sudbury’s housing supply levels are sitting at the lowest level in 30 years. And in cities such as Hamilton and Kitchener-Waterloo, demand for short-term rentals is consistently strong, aided by yearly influxes of post-secondary students. Additionally, Sudbury, Timmins, and Sault Ste. Marie are amongst the cities participating in the recent  Rural and Northern Immigration Pilot, which is expected to ensue an influx of skilled immigrants in need of affordable housing and rentals.

With that all said, converting underperforming assets from other real estate segments is one way to meet growing demand for multi-family accommodations. I explain why below.



Because of their physical likeness to apartment buildings, hotels translate pretty plainly into affordable housing, market rentals, or student housing. Conversions of this sort not only benefits the undersupplied multi-family segment, but also hotel owners and operators and any investors. This is because converting hotel assets to multi-family apartments enables prompt, stable, and long-term profitable return.


Seniors housing

From the vantage point of multi-family developers, retirement homes and other forms of seniors housing pose unique value—again, due to their physical likeness to multi-family residences. For instance, suites within retirement homes tend to be more comparable in size to apartment suites—in fact, even more so than hotel suites, which tend to be smaller on average.



According to an article published recently in The Globe and Mail, bad offices make for great residential, and with office vacancies rising, old office stock is ripe for repositioning. In part, this is because commercial buildings tend to have traits that are desirable in today’s residential builds, such as thick floors, large elevators, and high ceilings. Moreover, converting offices into apartments is both faster and more cost-effective than building new. Considering alterations to plumbing and electrical, this route can still ensue something like a 50 per cent savings compared to building new.


Identifying multi-family potential

As with any investment opportunity, it’s important to first determine whether there is long-term value and potential for ROI. Here are some factors to consider.


Market demand and location

In the case of multi-family conversions, it’s important to identify and factor in the market demand, including sector profitability and the competitiveness of the landscape. Market demand tends to hinge largely on location.

Because of the nature of the tourism sector, hotels tend to be located in prime locations. The same can’t always be said for retirement homes and offices, so it’s important to study the macroeconomic environment of the area you’re considering investing in. This includes facts such as employment, income growth, population growth, and demographic characteristics. I’ve included some hot submarkets below.

  • Niagara is largely known as a tourist destination, but in recent years, it’s become a prime spot to settle for newcomers to Canada and those being priced out of the City of Toronto. This has led to a strong and growing demand for housing, especially in the multi-family and rental segments.
  • Sudbury has experienced rapid economic and population growth over the past few years. The city boasts consistently high rates of immigration and interprovincial migration, aided by the city’s affordable cost of living. Post-secondary institutions in the city, including Laurentian University and Cambrian College, mean that there is consistently strong demand within Sudbury’s rental segment.
  • Hamilton is another city that’s experienced rapid growth, which has led to high demand for housing. Demand in Hamilton’s rental segment is driven, in part, by its large community of post-secondary students attending McMaster University and Mohawk College, amongst others. Hamilton is home to about 5,000 international students and approximately 3,000 to 4,000 immigrants settle in the city each year.


The “bones”

As you would with the purchase of any property, consider the construction and layout. Investigate the HVAC, electrical, lighting, and fire systems, as well as the building envelope and any technology infrastructure. In terms of layout, investigate floor plate size and shape, usable square footage, common areas, and the presence of kitchen amenities. In addition to ensuring that these elements are up to spec, it’s important to consider the amount of work, time, and capital needed to convert the property to multi-family.


Legal and regulatory 

Finally, since you are dealing with construction, it’s crucial to understand the legal and regulatory bodies in the area. This involves looking into building codes, insurance requirements, and government regulations. You will also have to rezone to assign the asset to a different property category. If it’s your first multi-family conversion or your first time working in the city, you can consider hiring a consultant to do the rezoning.


Invest With Crescendo Equity

For those hoping to invest in the sector, now is a good time if you have the financial latitude to do so. Beyond being aware of the overarching trends, knowing these kinds of market opportunities inside and out will help you to make sound investment decisions that will yield enduring value from the outset. If the promising opportunities above have piqued your interest, we recommend moving quickly. At Crescendo Equity, we identify and research hundreds of properties, using extensive personal experience to secure opportunities that demonstrate solid long-term fundamentals and attractive relative pricing. Get in touch to learn how our team of dedicated real estate investors can help you secure the right investment opportunities for you.