Today’s commercial real estate conversations are largely focused on two topics: politics and liquidity. On April 5, 2023, Willy Walker, Chairman and CEO of Walker & Dunlop discussed these issues with National Multifamily Housing Council (NMHC) President Sharon Wilson Géno and Real Estate Roundtable’s founding president and CEO Jeffrey D. DeBoer during a one-hour webcast presentation.
The conversation began by addressing the Silicon Valley Bank and Signature Bank failures as well as their potential impact on commercial real estate markets. “Interest rates go up 475 basis points in 12 months,” DeBoer noted,” so something’s going to break.” He suggested that Congress may reinstate some banking provisions that had been rolled back after the collapses occurred; however Géno expressed her concerns about overregulation – particularly for regional banks who have become increasingly involved in underwriting construction loans which are essential for housing supply growth.
The discussion then moved to office space readaptation into multifamily uses with DeBoer noting how this is still an evolving situation due to the Stopping Home Work’s Unproductive Problems Act – SHOW UP bill which has passed through House but is yet being considered by Senate . Passage of this bill would bring many people back into physical offices thereby benefiting small businesses, parking garages , transportation services , safety measures etc . However both Géno & Debboer agreed that only 10-15% of existing office spaces can be easily adapted for residential use .
Finally they concluded by suggesting caution when making major undertakings given current circumstances such as zero interest rates followed by sudden 500 bps increase in financing costs amidst a pandemic resulting in changes to built environment usage patterns
