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Commercial Real Estate Delinquency Rates Climb – Watch Out In 2017: 01/11/2017

Commercial Real Estate Delinquency Rates Climb – Watch Out In 2017

An article from the Properties Online blog

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Published: 01/11/2017
Posted by: RE Technology

cityscape

Commercial real estate trends point to prices falling by as much as 5 percent in the next 12 months.

What gives?

A storm is brewing, creating a tsunami of issues for the commercial sector. The global surge in U.S. property investments that drove record values in years past is expected to wane alongside lower oil prices and disjointed debt markets. Property sales by publicly traded landlords, debt maturities, and tightened regulations are furthering the trend. The instability is creating a volatile commercial real estate selling atmosphere, with uncertainty about U.S. policies following the presidential election worsening matters.

Let it rain

Commercial mortgage-backed securities (CMBS) float amidst a tumultuous market in which borrowing costs for landlords are higher, inhibiting future price growth. Properties in small cities, dependent on Wall Street banks for funding, have been hit especially hard – a global market rout in February sent prices plummeting after Wall Street dealers were unable to provide liquidity when hedge funds were forced to sell CMBS holdings. Regulations such as Dodd-Frank are also not helping the situation, making it increasingly expensive for banks to hold securities.

 

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