Commercial real estate investors and lenders are facing mounting losses if societal habits have changed for good in a post-COVID world, writes Sinead Cruise, Lucy Raitano and Lewis Jackson for Reuters, citing research from Credit Benchmark.
While tricky economic conditions are not unfamiliar to seasoned commercial property investors, changing routines around online shopping and working from home may see a permanent surplus of buildings in major cities like London, Los Angeles and New York.
“Global lenders to U.S. industrial and office real estate investment trusts (REITs), who supplied credit risk assessments to data provider Credit Benchmark in July, said firms in the sector were now 17.9% more likely to default on debt than they estimated six months ago. Borrowers in the UK real estate holding & development category were 4% more likely to default.”
Reuters, July 31, 2023.