- A Moody’s Analytics report predicts the impact of a corona-hit hit the size of a major recession on commercial real estate.
- The report predicted rising vacancies and falling rents across all property asset classes, although traditional apartment buildings will be the most stable.
- Not surprisingly, retail and hotel properties are likely to experience the worst of the crisis, but some niche parts of apartment buildings, such as student and senior housing, could also be at risk.
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The coronavirus pandemic has completely changed the economic outlook for 2020, leading to mass layoffs in retail and hospitality Delete Trump Bump stock market gains.
With the potential for 18 months of interruption and prediction of a recession by leading financial institutions, this is probably just the tip of the iceberg.
While the commercial real estate industry has never seen a breakdown, it is by no means immune to the consequences. In a Moody’s Analytics report released last Thursday and written by REIS (Real Estate Information Services) team chief economist Victor Calanog, the question was asked: "How bad can it get? COVID- 19 and The Outlook for CRE. "
The report predicts the impact of a "sustained slump" or pandemic-induced recession that would result in GDP shrinking 4% in various asset classes and regions in commercial real estate in a year and a half. Moody's analytics' lengthy slump scenario would result in roughly the same level of GDP contraction and disruption as the Great Recession.
The report predicts that all asset classes will be affected by real estate, but forecasts retail and hospitality will bear the brunt of the coronavirus outage. Multi-family housing is the least affected, but subsectors such as student housing and senior housing are less secure.
The report includes charts and tables that show the effects of the coronavirus on each impact. We selected seven of the most important ones and listed them below.