Commercial Real Estate Properties Experiencing Distress
The impact of Covid-19 on commercial real estate will last long after the end of 2020.
Around $ 126 billion in real estate in the sector – hotels, offices, and retail space, to name a few – will be sold at distressed prices through 2022, Bloomberg News reported, citing data from CoStar Group. That’s more than what hit the market in the two years following the great 2008 recession.
Revenue from these troubled assets could hit up to $ 321 billion by 2025 – and in the worst case scenario, it could be $ 659 billion, according to a CoStar.
Mortgage defaults for hotels and retail properties are skyrocketing due to the pandemic. On the office side, it remains unclear when or if companies will bring employees back once it is safe, but some are forecasting large losses.
Private equity and hedge funds have raised billions of dollars to pour into these distressed real estate assets.
[Bloomberg] – Keith Larsen