US commercial real estate probably won't recover from crisis until 2040, thanks to out-of-fashion office buildings, economist says
The US commercial real-estate sector will recover at a painfully slow rate from its deepening downturn as office buildings go out of fashion, according to Capital Economics' deputy chief property economist.
"It's very easy to see values take much longer to get back to those levels, and actually, the growth rate we've assumed to get back to the peak after the size of the fall we're expecting over the next few years is higher than the rate in the last 10 or 20 years," Raichura said. The commercial real estate industry has been under stress since the US regional-banking sector faced a bout of turmoil earlier this year. Regional lenders, which are key sources of CRE financing, could face a wave of defaults as commercial property owners struggle with tightening credit conditions and higher interest rates. for commercial real estate – and tumbling prices could fire up the banking crisis again and hurt the US economy. is adding to concerns a crisis may be brewing in the sector.
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