Impending Commercial Real Estste Collapse

[Chad U.]

I think there will be bloodbath in commercial real estate, not so much in residential. It's already started. The WSJ reported this week that RBC bank was trying to fire sale $600B worth of property this week that it had loans on.

https://www.wsj.com/articles/r...

this could have a huge cascading effect and consequences on the stability of the commercial mortgage Market. Interested to hear what others people's take with experience in commercial real estate.

[Steve K.]

@Chad Urbshott I don't know about a "collapse" but there will be some short term pain for sure. Like many medium-sized cities, the majority of the CRE in my local area is owned by a handful of extremely wealthy individuals who have been gobbling up market share and building vast wealth for decades. There will certainly be a lot of businesses suffering, retail especially and also restaurant tenants will likely be defaulting on their lease agreements in large numbers soon, etc. but I believe the few people who own most of the CRE in this town have pockets that are deep enough to ride out the short term effects of the Coronavirus, and strong demand will return in that space immediately after this is over. The billionaires who own a very high percentage of the CRE here will probably buy up more distressed assets from smaller less capitalized operators who are unable to weather the storm and are forced to sell. It will be market specific of course, and I have no idea about the National CRE market or a macro effect in institutional investing, that's just my insight from my local market for what it's worth.