Sumary of Distress Watch: Why CRE Performance Will Hinge On The Return To The Office:
- July 22, 2021 5 min read This story originally appeared on ValueWalk Experienced investors in distressed commercial real estate (CRE) know that significant societal change always leaves some businesses to struggle, as surely as it creates winners of organizations best suited to new mainstream preferences and business models.
- And by any measure, the world has experienced more than a year-long traumatic event that continues to transform behaviors.
- Q2 2021 hedge fund letters, conferences and more Many have been surprised at the lack of distress so far among commercial property owners.
- The pandemic is bringing change on a grand scale that will have lasting implications for how populations use real estate, yet many managers of distressed funds have found few opportunities to deploy their stockpiles of dry powder.
- In the United States, a federal moratorium on evictions for non-payment of rent plus a host of similar measures – including foreclosure moratoriums at the state and local level, and the prodigious federal stimulus programs – have largely masked the economic fallout from changes in work styles, consumer preferences and migration patterns.
- Trends That Will Be The Downfall Of The CRE Performance Here are the top trends we feel will drive distress in the post-pandemic real estate market, and a few of the reasons we expect office properties to be the first dominoes to fall.
- Major employers including Apple, Google and Microsoft have announced plans for hybrid scheduling, in which employees will work some days at home and others in the office.
- Although some highly competitive industries and markets may see more workers return to five-day weeks in the office, that may not become a universal norm for years.