Highlight of the Week
CRE Values Remain in Flux
- In the current high-interest rate environment, CRE owners recognize the reality of underperforming assets and rising refinancing costs. However, the impact of these factors on property value fluctuates based on the local market and asset class of each property.
- Sales activity remains sluggish as uncertainty surrounding the true valuation of these properties remains and market participants struggle to find comparable transactions.
- Meanwhile, 3rd party investors maintain an opportunistic view of CRE, and have raised billions of dollars in funds with the intention to acquire discounted commercial property.
- As market sentiment shifts to a ‘soft landing scenario’, both owners and lenders interests are aligned in the hope that interest rates will decrease earlier than projected in 2024 and property discounts can be avoided.
- Expect an increase in discussions between owners and lenders to provide short term extensions that will bridge maturities to a more favorable interest rate environment.