{"id":346478,"date":"2023-03-28T05:00:41","date_gmt":"2023-03-28T09:00:41","guid":{"rendered":"https:\/\/www.sgtreport.com\/?p=346478"},"modified":"2023-03-27T22:46:33","modified_gmt":"2023-03-28T02:46:33","slug":"guess-who-is-now-warning-that-commercial-real-estate-is-in-trouble","status":"publish","type":"post","link":"https:\/\/www.sgtreport.com\/2023\/03\/guess-who-is-now-warning-that-commercial-real-estate-is-in-trouble\/","title":{"rendered":"Guess Who Is Now Warning That \u201cCommercial Real Estate Is In Trouble\u201d?"},"content":{"rendered":"

by Michael Snyder, The Economic Collapse Blog<\/a>:<\/em><\/p>\n

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What will our financial system look like once the 20 trillion dollar commercial real estate industry implodes?\u00a0 You might want to start thinking about that, because the truth is that the industry is in a tremendous amount of trouble.\u00a0 \u00a0Occupancy rates are extremely low and getting lower, rising interest rates have created all sorts of havoc, and now many of the small and mid-size banks that the industry depends upon for financing\u00a0are in serious jeopardy<\/a>.\u00a0 In essence, the commercial real estate industry is facing a \u201cperfect storm\u201d of nightmares, and this crisis is only going to escalate in the months ahead.<\/p>\n

TRUTH LIVES on at\u00a0https:\/\/sgtreport.tv\/<\/a><\/p>\n

I may sound like a broken record to some of my readers, because I have been warning about a commercial real estate crash for some time.<\/p>\n

But now what is happening is so obvious that\u00a0even CNN<\/a> is sounding the alarm\u2026<\/p>\n

After decades of thriving growth bolstered by low interest rates and easy credit, commercial real estate has hit a wall.<\/p>\n

Office and retail property valuations have been falling since the pandemic brought about lower occupancy rates and changes in where people work and how they shop. The Fed\u2019s efforts to fight inflation by raising interest rates have also hurt the credit-dependent industry.<\/p>\n

Recent banking stress will likely add to those woes. Lending to commercial real estate developers and managers largely comes from small and mid-sized banks, where the pressure on liquidity has been most severe. About 80% of all bank loans for commercial properties come from regional banks, according to Goldman Sachs economists.<\/p><\/blockquote>\n

Amazingly, what you just read are three paragraphs from CNN that are completely factually accurate.<\/p>\n

Needless to say, that doesn\u2019t happen too often these days.<\/p>\n

But at this point there is no debate about what is happening to commercial real estate.\u00a0 In fact, short sellers are\u00a0aggressively shorting the industry<\/a>\u00a0right now because they all want a piece of the carcass\u2026<\/p>\n

Recently, short-sellers have stepped up their bets against commercial landlords, indicating that they think the market will continue to fall as regional banks limit access to credit. Real estate is the most shorted industry globally and the third most in the United States, according to S&P Global.<\/p><\/blockquote>\n

This is going to be such a disaster.<\/p>\n

But don\u2019t just take my word for it.<\/p>\n

According to\u00a0Elon Musk<\/a>, the commercial real estate crisis is \u201cby far the most serious looming issue\u201d facing our economy\u2026<\/p>\n

\n

Over the next 5 years, more than $2.5 trillion in commercial real estate debt will mature.<\/p>\n

This is by far more than any 5 year period in history.<\/p>\n

Meanwhile, rates have more than doubled and commercial real estate is only 60-70% occupied.<\/p>\n

Refinancing these loans is going to be\u2026<\/p>\n

\u2014 The Kobeissi Letter (@KobeissiLetter) March 26, 2023<\/a><\/p><\/blockquote>\n