Distress is spreading in the US commercial real estate industry, with the amount of troubled assets climbing to nearly $64 billion in the first quarter of this year.
The amount of distressed assets rose 10% in the first three months of the year, according to a new report from MSCI Real Assets. Risks loom on the horizon too, with nearly $155 billion of commercial property assets that are potentially troubled, according to the report.
Higher borrowing costs have pummeled the commercial real estate industry, driving prices lower and causing some owners to choose to default. Much of the potential distress is tied to buildings that need refinancing at a time when lenders are tightening credit following the collapse of several regional banks.
“Should this potential distress be upgraded to full-blown trouble, an increase in distressed asset sales and declining prices would be inevitable,” MSCI Real Assets researchers including Jim Costello and Alexis Maltin wrote in the report.
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Source: fortune.com
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