In Bloomberg Law’s 2021 Commercial Real Estate Bankruptcy Survey, we asked attorneys which commercial real estate (CRE) property types would see the most defaults in 2021. So far this year, data on delinquent CRE loans show some similarities—and one key difference—when compared with the attorneys’ predictions.
Respondents most often selected retail, hospitality, and office among their top three choices for 2021 defaults. The first two are not surprising, as pandemic-related distress in retail and hospitality has been high-profile in the last several months. Interestingly, an equal percentage of respondents selected office as selected hospitality for one of the top three defaulting property types. Cancellation of office leases and potential vacancies caused by permanent moves to remote work might be behind this choice.
RSK: What the graphs say to me is this; even though current defaults show office at a low point is mainly because companies are still able to pay rent as employees work from home. But as leases come due many offices may cut their space needs down which could in the near future up the delinquency rate. Right now it is perception betting on the future needs why many think office will be right up near the top.
- - Volume: 9 - WEEK: 21 Date: 5/18/2021 7:56:19 AM -