
4 Reasons why CRE has tougher times ahead
Jesse Colombo, writer for Forbes, predicted in the summer of 2019 that there was a two-thirds probability of a recession in 2020. He believes that at this time, the bubble will likely burst due to the COVID-19 pandemic. Here are the key reasons why:
The US Commercial Property Index, created by Green Street Advisors, shows that commercial real estate prices have more than doubled since 2009.
Research from the Federal Board of Governors shows that US CRE loans increased by $863B (62%) since 2012.
With retail stores being closed since mid-March, many retailers are expected to go bankrupt including Neiman Marcus and J Crew. Green Street Advisors predicts that over 50% of department stores in malls will close by 2021.
JP Morgan predicts that US GDP will decrease by 40% in the second quarter.
