Investing Ideas

Emerging opportunities in real estate debt

Commercial real estate fundamentals look healthy outside of the office sector while sentiment has been improving.

By: Andrew Rubin
Updated: 3/19/2024
Key Takeaways
  • Investor sentiment towards commercial real estate (CRE) has improved markedly since reaching a multiyear low in 2022, overcoming several investor concerns and setting the stage for potential investment opportunities in 2024 and 2025.
  • Industry fundamentals outside of the office sector may be stronger than many market participants appreciate, supported by historically high occupancy rates and still above-average cash flow growth in most segments.
  • Commercial mortgage origination volume declined by roughly 50% in 2023 at a time of looming loan maturities.
  • Banks represent roughly half of CRE debt outstanding and office loan exposure appears largely manageable for most of these institutions, which could help mitigate some of the contagion risk of spillover into other CRE sectors.
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