That there was going to be trouble was obvious back in the late summer and early fall of 2022. Interest rates were climbing fast. Too many CRE properties got financing in a zero-interest-rate environment that encouraged high leverage and refinancing at current rates would be different, to put it mildly.
Not everyone had or was willing to part with the extra capital necessary to keep a building afloat and financially viable. Then, in some markets, particularly office, it wasn't even clear whether there would be enough revenue when a lot of businesses questioned whether they needed as much space as they previously had, given work-from-home pressures. CBRE Economic Advisors has estimated that office alone faces a $73 billion financing gap.
And that is just one sector. Swiss Re Instituted said in April 2023, commercial real estate will see rough sledding for years.
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