Commercial real estate is vulnerable to high interest rates, particularly after an era of cheap money. And like countless others have said before, the one thing that’s separating the office sector, making it the most at risk, is demand.
Amid the continued prevalence of remote work, the office sector is currently undergoing an economic reckoning. Capital Economics, a London-based provider of independent macroeconomic analysis, forecasts, and consultancy, predicts a substantial decline in office values from peak to trough, amounting to 35%. Furthermore, this decline is unlikely to recover even by 2040, in the firm’s view.
