Fortune: Billionaire CEO Sees $1 Trillion in Commercial Real Estate Defaults Coming for 'Very, Very Ugly Market' Over Next 2 Years
Article by Will Daniel in Fortune
Rising interest rates, the remote work trend, and the dominance of e-commerce sellers have combined to hammer the commercial real estate market over the past few years. Sky-high office and retail space vacancies are plaguing owners in this new environment, rents are plummeting, and borrowing costs have soared. As a result, U.S. commercial real estate prices have fallen 11% since the Federal Reserve began raising interest rates in March 2022, the IMF reported last week, the worst decline in over 50 years.
The outlook for the sector is now so bleak that Cantor Fitzgerald’s billionaire Chairman and CEO Howard Lutnick is predicting between $700 billion to $1 trillion of defaults over the next two years unless interest rates fall quickly—and he sees that as unlikely.
“I think it’s going to be a very, very ugly market in owning real estate over the next 18 months, two years,” Lutnick told Fox Business last week, arguing there’s going to be a ......