Little things can add up. For CRE, that is a range of costs including insurance, utilities, taxes, and other operating expenses. That can burden a property just as easily as higher interest rates.
According to a Moody's Investor Service report cited by Barron's, overall expenses for CRE properties are up by more than a third between 2017 and 2022. Insurance is up 73% over the last five years, utilities are 40% more expensive, and property taxes and other operating expenses rose 27% and 29% respectively.
And the lion's share of these cost burdens, insurance, show little sign of retreating.
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