Uncertainty Due to the Pandemic May Cause Commercial Real Estate Prices To Fall

UCLA economists suggest that the uncertainty of the pandemic may lead to 10-20% reductions overall in the value of commercial real estate. My opinion is triple net investments with high credit tenants might escape this but retail strip centers, multi-tenant office buildings, free standing retail with less than stellar credit, and even the sought after apartment investment market might be affected. There are governors telling tenants they can’t be evicted, and thus there may be wide scale non-payment of rents leading to non-payment of mortgages which if the Federal government doesn’t step in may lead to massive foreclosures and a possible collapse of portions of our banking system. How long this pandemic crisis lasts will be the determining factor.