A flood of distressed assets is headed for the market. There has been some debate about the future market for distressed assets as a result of the pandemic. Some experts have argued that better underwriting will help property owners hold on to properties through the pandemic. However, as the public health crisis wears on, property owners are left with few options to cope with income loss. The dynamic has promised an increase in distressed assets.

"If you look at assets that were impacted by COVID, like hospitality, which has been devastated, retail and office, there is true distress in the commercial real estate sector as more and more time passes where there is impact to the economy," Pat Jackson, CEO of Sabal Capital Partners, tells GlobeSt.com. Securitized loans, for example, don't have the option to be extended after a certain period of time and they will go into special servicing. It will start the drumbeat of foreclosures."

In most economic downturns, distressed assets arrive more immediately; however, there was a lot of hope and support to avoid a surge in defaults. "It is taking a little longer than usual. There was a lot of hope in the marketplace, but the second flare up took a lot of wind out of people's sales," says Jackson. "I think even now, people are talking about what happens when people go back to school—will there be a second flare up? People are skeptical that the bell curve we are watching from a national perspective is on a permanent downward trend. No one knows. Those are issues that will impact the investment sector."