CRE has been an industry soaked in uncertainty. Interest rate jumps, worries about a potential recession, significantly reduced transactions that makes price discovery difficult. For those in the office sector — property owners, developers, investors — it's been worse.
Atop all the macroeconomic issues, there's been work-from-home, hybrid business models, and tenants wondering how they will operate going forward and whether they really need all that office space they currently lease.
One of the defensive moves has been the so-called flight to quality. Yes, B and C Class properties might suffer, but surely not Class A, because those who need space would look to move up. Unfortunately, that assumption is not meshing with reality, according to a report from Moody's Analytics.
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