According to a report by Bloomberg News, the U.S. commercial real estate sales market is showing signs of recovery with prices down 19% from their peak in 2022. This can be attributed to lenders and owners looking to minimize losses and make new investments following the Federal Reserve’s first rate cut in four years, which has brought more clarity on valuations.
David Aviram, co-founder of Maverick Real Estate Partners, believes that there will be increased activity in the market as we head into 2025 due to a mix of factors leading to both instability and opportunity for different players. One major driver will be struggling properties that took on too much debt at lower rates.
Bloomberg also reported that sellers have had to sell properties at steep discounts recently, particularly in the office sector. For example, earlier this year Empire Capital Holdings and Namdar Realty Group purchased an office property at 321 W.44th St for a discount of 67% from its purchase price just two years ago. Similarly,the former Chicago headquarters of Cboe Global Markets Inc was sold this summer for half its pre-pandemic value.
Despite these challenges faced by sellers,this year through July saw steady improvements with transaction volumes increasing by $203 billion according MSCI Inc.However,it is worth notingthatthe distressed property market is still unfolding,and significant challenges are expected ahead.In fact,on October22ndexpertsfrom Trimont,Greystone,and Transwesternwill discuss rising distressed assets,CMBSmaturities,and stricter underwriting practicesat Connect Distressed Investment & Finance event held at Luxe on Sunsetin LA.This event aims togive insights into what lies ahead as we transition into2025.
