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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