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Significance
Lower demand for office space, the unprecedentedly sharp increase in rates, and pressure for buildings to upgrade to meet environmental regulations and compete with home working is making CRE one of the worst performing asset classes.
Impacts
Reflecting the fears, US regulators have updated their guidance to widen the tools banks can use to contain commercial property distress.
Lending opportunities will rise for less regulated shadow banks; they hold over USD3tn of real estate fund assets, but outflows can spiral.
After the global financial crisis, rebounding office employment helped commercial property recover but this time office work is declining.
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2023
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