Commercial real estate investors and lenders are slowly confronting an ugly question - if people never again shop in malls or work in offices the way they did before the pandemic, how safe are the fortunes they piled into bricks and mortar?
Rising interest rates, stubborn inflation and squally economic conditions are familiar foes to seasoned commercial property buyers, who typically ride out storms waiting for rental demand to rally and the cost of borrowing to fall.
This time though, analysts, academics and investors interviewed by Reuters warn things could be different. That means values of city-centre skyscrapers and sprawling malls may take much longer to rebound. And if tenants can't be found, landlords and lenders risk losses more painful than in previous cycles.
Global banks hold about half of the $6 trillion outstanding commercial real estate debt, Moody's Investors Service said in June, with the largest share maturing in 2023-2026.warned of more to comeGlobal lenders to U.S. industrial and office real estate investment trusts , who supplied credit risk assessments to data provider Credit Benchmark in July, said firms in the sector were now 17.9% more likely to default on debt than they estimated six months ago.
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