In its recently-releasedbi-annual Financial Stability Report, the Federal Reserve issued a grim warning thatasset prices remain vulnerable to significant price declines shouldthe pandemic take an unexpected course. One example in particular,it said, was commercial real estate.
CRE prices were already high relative to fundamentals before thepandemic, it noted, and disruptions in the hospitality and retailsectors have been severe.
"The vulnerability stemming from elevated CRE valuationpressures, coupled with a dim outlook for the sector as indicatedby recent declines in equity REIT prices, suggests that CRE mayundergo a substantial repricing in response to disruptionsgenerated by the COVID-19 pandemic," it said.
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
*May exclude premium content
Already have an account?
Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
