Economists are growing concerned about the $20 trillion commercial real estate (CRE) industry.
After decades of thriving growth bolstered by low interest rates and easy credit, commercial real estate has hit a wall.
Office and retail property valuations have been falling since the pandemic brought about lower occupancy rates and changes in where people work and how they shop. The Fed’s efforts to fight inflation by raising interest rates have also hurt the credit-dependent industry.
Recent banking stress will likely add to those woes. Lending to commercial real estate developers and managers largely comes from small and mid-sized banks, where the pressure on liquidity has been most severe. About 80% of all bank loans for commercial properties come from regional banks, according to Goldman Sachs economists.
Read more at CNN.com
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