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Shutdown’s Impact on CRE May Be Still to Come
The coronavirus pandemic’s toll on the estimated $16-trillion U.S. commercial real-estate market has only begun to show, as buildings start reopening in major cities and properties emerge from months of mass shutdowns. MarketWatch reported that underneath the semblance of the new normal are tenants battling landlords for rent relief, a deluge of property owners falling behind on their mortgages and property prices that are tumbling.
“I think it’s going to be a hail storm out there,” said Jeffrey Citron at law firm Davidoff Hutcher & Citron LLP. “In most instances, it’s probably in the best interest of landlords to sit down and work with their tenants.”
Gina Szymanski at AEW Capital Management thinks the future looks less dire overall for commercial properties. However, she remains cautious on heavily discounted property sectors, particularly where future cash flows look uncertain and buildings likely will be operating “below an ideal level” of capacity.
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