Bank of America investment strategist Michael Hartnett wrote in his Flow Show report that commercial real estate could be the next danger spot in the uncertain U.S. financial sector.
Last week, the CEO of JPMorgan Asset Management, George Gatch, warned commercial real estate is one of the critical areas of risk in global markets.
Harnett indicated the combination of tightening lending standards for commercial loans and rising interest rates is dangerous in the current banking scenario.
- Scott Rexler, CEO of RXR, tweeted that $1.5T in commercial real estate debt will be up for refinance in a market where rates are high and valuations are low.
- According to Rexler, a majority of this debt was financed when the base interest was near zero during the start of the pandemic.
- Eric Rosengren, former leader of the Boston Fed, pointed to declining real estate investment indexes and said bank leaders would be pulling back as leases roll, with high office vacancies and high-interest rates.
