The S&P 500 has dropped considerably since the advent of COVID-19 although well off the lows. Although the economy is slowly starting to open up, it seems inevitable that we will have at least a short-term recession. This differs from past recessions such as the “Great Recession” because it has been an “engineered” recession to try to show down the spread of the virus. In contrast, the Great Recession was a result of a financial crisis due to too much leverage in the economy. At this time, it is hard to know how this will impact commercial real estate in general and different property sectors in particular. The question is how far property values might fall? No one really knows, but we can look at the Great Recession to give us some clues as to what might happen under a worst case scenario.
How Far Could Commercial Real Estate Values Drop?
The Analyst
