Distressed Assets May Be The Tonic A Stressed CRE Market Needs

The commercial real estate market continues to be plagued by fears of a recession. Driven by inflation and the heightened cost of capital, investor sentiment is diminishing. According to a survey from Lightbox, nearly 70% of CRE investors said they are concerned for the future of the market as the year comes to an end.

The Federal Reserve has raised interest rates six times so far this year to combat one of the market’s most pressing challenges: inflation. When asked recently about further rate hikes, Chair Jerome Powell hinted that the Fed will continue to increase rates until inflation is curbed. Consequently, CRE assets are experiencing decreased demand, ultimately lowering property values and minimizing lenders’ willingness to participate in transactions.