According to a recent report from Bloomberg News, the distressed U.S. commercial real estate market has seen its highest value in ten years during the third quarter. Data from MSCI Real Assets shows that buildings in bankruptcy, repossessed by lenders or undergoing liquidation have increased by $5.6 billion overall during this time period. The office sector has been hit particularly hard due to remote work and decreased tenant demand for space, accounting for 41% of the total increase.
While distress levels are still lower than those seen during the global financial crisis, there is still cause for concern as MSCI identifies $215.7 billion worth of potentially troubled properties with issues such as delinquent payments or slow lease-ups being cited as contributing factors.
Among these at-risk properties are apartment buildings which make up almost one-third of the total tally; however, this is likely due to their higher number rather than any inherent issues within this sector itself according to MSCI.
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The article “CRE Distress Reaches Highest Level Since 2013” can be found exclusively on Connect CRE.
