Storm Brewing for Commercial Real Estate; Will Declines Match 2008?

A commercial real estate downturn could be on the horizon warns Apollo Global Management co-president Scott Kleinman.

    • While the private market hasn’t yet heavily marked down commercial real estate, there are clear signs of stress.

Why it matters: Commercial mortgage-backed securities (CMBS) issuance, the financial backbone of commercial buildings, has plunged by about 83% this year to just $9 billion.

    • These bonds have been a significant health indicator for income-generating real estate like hotels, office buildings, malls, and apartments.

The big picture: Morgan Stanley projects a possible 40% tumble in commercial real estate prices, matching the steep declines witnessed during the 2008 financial crisis.

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