While commercial real estate valuations remain high, the Federal Reserve Board of Governors say low transaction volumes, specifically for distressed properties, may mask some declines in value.
Overall, there was $20.9 trillion outstanding of commercial real estate. From Q4 2019 to Q4 2020, there was 7.4% growth in the sector. By comparison, the sector posted 5.7% growth from 1997 to 2020.
The Fed says that disruptions caused by the pandemic make it hard to understand what valuations are in the CRE sector. While cap rates continue to decline, the Fed notes that an index of REIT properties remains below pre-pandemic levels.
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Leslie Shaver
Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.
