Everyone and their dog has been calling for a commercial real estate crash. Morgan Stanley even issued a warning recently that we could see commercial real estate prices plunge by as much as 40%. The supposed trigger for the crash is the $1.5 trillion-plus in commercial real estate debt that is due before the end of 2025. With vacancy rates up and interest rates at their highest levels in over 15 years, some commercial real estate owners won't be able to get their debt refinanced. Perhaps a lot of them! When debt can't be refinanced, the underlying property is usually sold - either by the owner or by the lender after it repossesses the property. And if a large number of refinancings fail in a short period of time, it could put huge pressure on commercial real estate prices. Due to all the speculation about a potential commercial real estate crash, stocks in the sector have already been hit pretty hard. But that doesn't mean there isn't value to be found there. |
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