News February 13, 2024

The Brutal Reality of Plunging Office Values Is Here

Bloomberg reported that the $20 trillion US commercial real estate market is starting to activate. Commercial property deals in the US are finally moving, but at deep discounts, forcing some lenders around the world to brace for souring loans. It’s a turning point for the market as the Federal Reserve ends the fastest pace of interest-rate hikes in a generation — providing more clarity to real estate investors on where borrowing costs stand. Some property owners will have little choice but to sell as their debt come due: More than $1 trillion in commercial real estate loans are set to mature by the end of next year, according to data firm Trepp. “Things can’t just sit forever,” said Josh Zegen, a co-founder of Madison Realty Capital. “If you have some trades, and values are coming down, that’ll force some of the mark-to-value conversations.”

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