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Commercial real estate values have been on the decline in the US. Related storiesBanks, meanwhile, are quietly shedding exposure to commercial real estate debt. AdvertisementInvestors have been watching the commercial real estate industry since the pandemic when the work-from-home trend cleared offices of workers. Some real estate veterans are calling for a major correction in the industry. The commercial property sector, in particular, could see a wave of bankruptcies and properties with forced sales, according to Kiran Raichura, the deputy chief property economist at Capital Economics.
Persons: , Banks, Goldman Sachs, Torsten Slok, Moody's, Kiran Raichura, Raichura Organizations: Service, Bloomberg, Business, Deutsche Bank, New York Times, Capital Economics Locations: North America, American
Inside Tesla's make-or-break earnings report
  + stars: | 2024-01-24 | by ( Dan Defrancesco | ) www.businessinsider.com   time to read: +6 min
NEW LOOK Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. In today's big story, we're previewing Tesla's make-or-break earnings report. And then there's the ultimatum Elon Musk issued to Tesla's board about wanting more voting rights or taking his AI projects elsewhere. Business Insider's Jennifer Sor has a roundup of what five Wall Street firms expect ahead of Tesla's earnings report. TeslaHow Musk pitches Tesla's year ahead will also be a telling signal, Nora told me.
Persons: , Donald Trump, Stephen Lam, Elon Musk, Jennifer Sor, Nora Naughton, BI's, Tesla, Nora, Kiran Raichura, Raichura, Goldman Sachs, Kraft Heinz, Sam Altman, it's, Glenn Harvey, Eddie Trunk, Brooks Kraft, Staples Organizations: Service, New Hampshire Republican, Tesla, Reuters, Capital Economics, Monster Beverage, Google, Google Google, Netflix, BI, of Fame, Apple, IBM, Brooks, Brooks Kraft LLC, Getty
Commercial mortgage borrowing will rise 29% this year, the Mortgage Bankers Association estimates. AdvertisementCommercial and multifamily mortgage borrowing and lending is forecast to surge 29% from last year's estimated total of $444 billion, the Mortgage Bankers Association estimates. "2023 is likely to go into the record books as the slowest year for commercial real estate borrowing and lending in roughly a decade," MBA Head of Commercial Real Estate Research Jamie Woodwell said in the report. AdvertisementTighter monetary policy since 2022 has pushed up borrowing costs across the commercial real estate market, and resulted in stricter lending standards among mortgage originators. Raichura expects prices to drop off another 10% this year, while a December outlook from NBER outlined that total commercial real estate losses could amount to $160 billion.
Persons: , Jamie Woodwell, Kiran Raichura, Woodwell Organizations: Mortgage, Association, Service, Real, Federal Reserve
Read previewThis year will be when the distress brewing in commercial real estate finally reaches its breaking point, according to Capital Economics. The research firm pointed to pessimism that has clouded the commercial real estate sector for the past year. Around $541 billion of commercial real estate debt officially matured in 2023, though fallout was muted as many loans were granted extensions, the firm said. Meanwhile, property investors like Brookfield are raising cash to potentially buy cheap commercial real estate properties that hit the market. AdvertisementSome commentators have warned of an even more severe crash coming for commercial real estate.
Persons: , Kiran Raichura, Raichura, Kyle Bass Organizations: Service, Capital Economics, Business, Fed, International Monetary Fund Locations: Brookfield
It's the costliest time to borrow money as interest rates now stand at 5.5%. Commercial real estate has been particularly damaged by the Fed's rate-hiking campaign. Defaults on commercial real estate loans have hit their highest levels since December 2021. The combination of workers unwilling to return to the office, coupled with the highest interest rates in 22 years, has spelled misery for the sector over the last 18 months. Commercial real estate has been particularly troubled by the Fed's aggressive hiking campaign, which has pushed up interest rates sharply since spring 2022.
Persons: Trepp, Kiran Raichura, we've, it's Organizations: Service, Capital Economics Locations: Wall, Silicon, delinquencies
US commercial real-estate values aren't likely to recover until 2040, according to Capital Economics' deputy chief property economist. Kiran Raichura said office values are unlikely to rebound to their peaks until 2040 thanks to the strengthening work-from-home trend, and high interest rates. The commercial real estate (CRE) industry has been under stress since the US regional-banking sector faced a bout of turmoil earlier this year. Columbia Business School professor Stijn Van Nieuwerburgh recently warned that the pain is just beginning for commercial real estate – and tumbling prices could fire up the banking crisis again and hurt the US economy. Furthermore, rising distressed commercial real-estate assets is adding to concerns a crisis may be brewing in the sector.
Persons: we've, Kiran Raichura, , Raichura, Stijn Van Nieuwerburgh Organizations: Capital Economics, Service, Columbia Business School
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailThere's a 'big differentiation' between the U.S. and UK markets, says property economistKiran Raichura of Capital Economics discusses the outlook for commercial real estate.
Investors are questioning the health of the commercial real estate sector following a string of recent banking crises. Mike Kemp | In Pictures | Getty ImagesConcerns are mounting around the health of Europe's commercial real estate market, with some investors questioning whether it could be the next sector to blow following last month's banking crisis. Analysts at Citi now see European real estate stocks falling by 20%-40% between 2023 and 2024 as the impact of higher interest plays out. In a worst-case scenario, the higher-risk commercial real estate sector could plummet 50% by next year, the bank said. Pere Vinolas Serra, chief executive of Spanish real estate company Inmobiliaria Colonial and chairman of the European Public Real Estate Association (EPRA), said the situation in Europe looks paradoxically strong.
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