Why Aren’t we Seeing more CRE Distress
WHY IS DISTRESS IN CRE SO LOW IN 2024?
Billions of Dollars Waiting TO Re-Enter CRE Markets
Entering 2024, investment firms have set aside over 240 Billion Dollars for potential CRE purchases
Many of these firms have been waiting for foreclosures ad distress, but so far there hasn’t been a large wave
Property Values Grew Substantially At The Start Of The Decade
All property types, apart from office, have average price points higher today then they did to close 2019
This means properties that traded in 2018, 2019, and 2020, are far removed from being in negative leverage situations
Some Properties Acquired At Market Peak Could Face Distress
While long-term pricing trends have shielded many investors from financing issues, properties acquired at the peak of the market cycle in 2021-2022 have seen annual valuations fall
This mostly just affects investors who used aggressive underwriting practices and those who have limited capital on hand
*Sources: Marcus & Millichap Research Services, Real Capital Analytics
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