Commercial Defaults Up, Particularly Office

[Andrew Syrios]

Residential real estate is doing pretty well despite the high rates, but commercial is getting hit pretty hard (the topic of my most recent article btw: https://www.biggerpockets.com/...). Office in particular is being hammered with 69% of defaults being in office: 

With work from home and deteriorating downtowns (not to mention high interest rates), I don't see this trend changing any time soon. 

https://cred-iq.com/blog/index...

[Chris Seveney]

Quote from @Andrew Syrios:

Residential real estate is doing pretty well despite the high rates, but commercial is getting hit pretty hard (the topic of my most recent article btw: https://www.biggerpockets.com/...). Office in particular is being hammered with 69% of defaults being in office: 

With work from home and deteriorating downtowns (not to mention high interest rates), I don't see this trend changing any time soon. 

https://cred-iq.com/blog/index...

 I agree. Office will continue to get crushed. Residential will take time to feel the impacts of the commercial side of things. Where it will impact residential is on the borrowing side, especially on lines of credit. You will continue to see less and less of those. People use them to paydown credit card debt then run up the debt again, that is where we will start to see some defaults.

I would also not recommend anyone be bullish on residential, while i do not see it crashing, I do not see the increases we saw past few years, it was a false sense due to the amount of money put into the system and only $300B of like $8T has been removed. If it stays, it will stay with the wealthy and continue to separate the classes, if the fed removes it from the balance sheet, it will have a greater impact on real estate.