There are signs of distress in CRE markets — jumps in distressed loan statuses and banks increasing CRE charge-offs — and yet the big wave of distress that everyone has been expecting doesn't seem to have come.
Marcus & Millichap CEO Hessam Nadji has said that all asset classes other than office have healthy fundamentals in occupancy and rents, and discounts a wave of fire sales. Then again, Joseph J. Ori, executive managing director of CRE advisory firm Paramount Capital Corp. says that while there isn't a collapse like during the Great Recession, further interest rate hikes by the Federal Reserve could double defaults from 2% to 4%.
So, perhaps the U.S. CRE market is waiting for the stage on the march to distress that may not be as bad as many had predicted. Or maybe — given some potential implications of a recent Green Street Real Estate Alert — the distress market is actually underway, only showing itself differently than expected.
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