The Daily Money: Commercial real estate could be heading for a crisis

Commercial property prices could fall as much as 40%, rivaling the decline during the 2008 financial crisis, according to Morgan Stanley analysts.

Read in browser Read in browser The Daily Money ALL THE MONEY NEWS YOU NEED TO KNOW Mon Apr 10 2023 Bailey Schulz | Money Reporter @bailey_schulz Happy Monday, Daily Money readers. It's Bailey Schulz here to bring you the day's top headlines. Even before Silicon Valley Bank's collapse in March, the commercial real estate market was dealing with a host of challenges: dwindling demand for office space brought on by remote work. An increase in maintenance costs. Climbing interest rates. Now, with more than half of the $2.9 trillion in commercial mortgages up for refinancing in the next couple of years, experts say the situation may get worse soon. "Even if current rates stay where they are, new lending rates are likely to be 3.5 to 4.5 percentage points higher than they are for many of CRE's existing mortgages," wrote Morgan Stanley Chief Investment Officer Lisa Shalett  in a recent report. The report said commercial property prices could fall as much as 40% "rivaling the decline during the 2008 financial crisis." "These kinds of challenges can hurt not only the real estate industry, but also entire business communities related to it," Shalett said. Commercial real estate includes office buildings, shopping centers, multi-family apartments, hotels and data centers. Commercial real estate includes office buildings, shopping centers, multi-family apartments, hotels and data centers. 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