Canada’s office REITs face another challenging year, but long-term investors could find some decent entry points in the sector in 2024, portfolio managers told the Canadian Press.

“We are in a ‘darkest before dawn’ scenario heading into 2024 for office REITs,” Michael McNabb, portfolio manager at Purpose Investments, told CP via email.

REITs have been repositioning assets, and in some cases, shifting away from the office sector entirely, as the market grapples with rising vacancy, the work-from-home movement, tenant space and cost reductions, and other pressures following the COVID-19 pandemic.

“The office isn’t dead, but I do believe it has changed,” McNabb told CP.

Investor sentiment on office product remains fairly negative and timing the recovery is difficult, Maria Benavente, vice-president and real estate-focused portfolio manager at Dynamic Funds told the wire service.

“It is likely that 10% to 15% of demand has been permanently destroyed with [work-from-home] trends,” she said. “We expect it to continue to be a market of haves and have-nots.”