The economy may have already started the upward path to recovery in the third quarter. After a devastating second quarter, there was an uptick in commercial real estate activity in the third quarter and a notable improvement in economic fundamentals. All of this suggests that the recovery has begun.

“We are certainly seeing an uptick in activity in Q3 compared to Q2. In Q2, there were a lot of unanswered questions and uncertainty that had many investors sitting on the sidelines,” John Williams, president and CIO at Avanath Capital Management, tells “The economy has gradually begun to rebound as businesses have started to re-open and individuals are going back to the office. This is a slower pace recovery, but certainly a glimpse that we will see the economy eventually rebound. That said, we are not completely out of the woods yet, however, we are very optimistic.”

In commercial real estate, investors have adapted to the new market environment, including health and safety regulations that limit in-person meetings, travel and property tours and inspections. “We are now seeing the industry adjust and adapt and finding new ways to get deals done,” says Williams. “For example, one way that we have been able to remain active is by conducting due diligence by using virtual techniques, such as drones. We have completed several acquisitions over the last several months. This includes our recent acquisitions of Saxton Trace in Florida, Cameron Court and North End in Detroit, MI and Cascades Village in Sterling, Virginia.”

There have, of course, been notable changes in investment strategy since the onset of the pandemic. Investors are more focused on resilient asset classes and have largely pulled away from the sectors most impacted by the pandemic, like retail and hotels. “We are seeing a shift among capital allocations towards more defensive strategies such as affordable housing,” explains Williams. “As the pandemic continues, more investors are diversifying into strategies that tend to provide downside protection. Affordable housing is one of those asset classes, which is why we have not slowed down activity and are continuing to source and acquire properties across the country.”

Next quarter, Williams expects the recovery to continue, particularly in asset classes with recession resistance. “We continue to remain optimistic about the multifamily industry, and in particular, the affordable housing industry. As mentioned, there has been an influx in demand for affordable housing and this demand will only continue to increase over the next several months,” he says.

Beyond the fourth quarter, affordable housing should continue to out perform the market for the next several years. “This increase in demand from renters, coupled with the increased capital allocation to the sector as investors opt for more stabilized assets that provide downside protection position the affordable housing sector to continue to perform in Q4 and over the next several years,” adds Williams.