As the COVID-19 pandemic has swept across the world and various forms of stay-at-home orders have been put in place, we’re experiencing the beginnings of an economic recession, which has put great strain on U.S. markets – including the commercial real estate market.
As certain types of tenants may struggle to pay rent, investors are questioning the ability of property owners to service their debt obligations.
Though much remains unknown related to the virus, potential treatments and vaccines, and what life looks like “post-COVID,” we look to history to help us glean insight into what the future might hold. In this note, we examine the performance of the CRE debt market during the 2008 global financial crisis (GFC), compare the state of the markets pre-GFC and pre-COVID, and use this framework to analyze the potential impact of COVID-19 on the CRE debt market.
