The Cost Of Covid: The Case of Commercial Real Estate, Government Shutdowns and Loan Delinquency

Trepp – Commercial real estate (CRE) loans in bank portfolios are showing stress related to the economic downturn and signs that some borrowers are already expecting to default on their mortgages.

The current delinquency rate stands at the highest level since the recovery period after the last recession but still well below the 9% delinquency rate for CRE loans at the peak of the financial crisis.

However, there are signals in the data that some borrowers may be strategically defaulting on their loans which could feed a wave of foreclosures in the coming four to six quarters.

Las Vegas NV leads the US in 30 day delinquent office property loans.

Columbus Ohio, home of The Limited Stores brand, leads the nation in 30 days delinquent retail property loans.

Here is a shocking graphic. New York – Newark hotels have seen -62% decline YoY in appraised values whereas Los Angeles saw a -74% decline in appraised values of office space.

Total sales of commercial real estate has declined to the lowest since mid-2010 and The Great Recession.

George Mason University School of Business professor sitting at a small desk in a large empty raw office space.