by Wolf Richter
Wolf Street
Rate cuts cannot fix the structural issues crushing office & retail CRE. But industrial, fueled by ecommerce, is in good condition.
Maybe Commercial Real Estate has hit “bottom” – as property giant Blackstone’s president and chief operating officer, Jonathan Gray said in January during an earnings call, which then was echoed by other CRE fund managers with lots of troubles in their portfolios. Or maybe it hasn’t.
Parts of it are in deep trouble, such as office, retail, and lodging, including for structural reasons that have nothing to do with interest rates and cannot be cured with rate cuts. Multifamily is not in as bad a shape, though problems abound amid numerous defaults and oversupply in some markets (oversupply of housing is exactly what consumers need, so this is a good thing for the economy but not for lenders and investors). And industrial, such as warehouses and fulfillment centers, is in good shape, though the bloom has come off the rose too.