CRE has fared very well during the pandemic, but it is important not to underestimate the support stimulus has given the industry, according to comments Fed President Esther George made in a speech yesterday. Her main concern for the industry? When the support ends, many renters and businesses could find themselves unable to meet their obligations. This in turn would force banks to realize losses on existing loans which would then weigh down credit growth and broader economic activity.

"While it is important to acknowledge the role of policy in supporting the real estate market, it is also important to be aware of the forthcoming challenges when this support is withdrawn, especially against the backdrop of longer-term structural changes to the outlook," she said. 

These structural changes have been well chronicled since the outset of the pandemic: WFH is driving huge changes in office demand, while suburbs become more favorable locations for both companies and renters. Office tenants are also increasingly favoring smaller footprints and shorter lease terms, and weighted-average lease terms are also slipping.