FireSide: Anatomy of a CRE correction—2024 Update  

CRE expert Andrew Korz joins Chief U.S. Economist Lara Rhame to update their outlook for the correction and discuss potential opportunities.

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February 14, 2024 | 25 minute read

About this episode

The commercial real estate (CRE) market continues to endure a correction that began 18 months ago.

Andrew Korz (Executive Director, Research) joins Chief U.S. Economist Lara Rhame to discuss the progress of the correction, examine its drivers and identify potential areas of opportunity that persist despite the challenged market environment.

Transcript excerpt

Lara Rhame:
Welcome back to Fireside, a podcast from FS Investments. I’m Lara Rhame, Chief U.S. Economist, and in today’s episode, we are talking commercial real estate. We have a new publication out, “The anatomy of a CRE correction.” It’s actually a take two, it’s a sequel. And for anyone who wants to dig into this topic, please find this on our website.

I am joined by the author, my partner in research, Andrew Korz, an executive director on our team. Andrew, welcome.

Andrew Korz:
Thanks, Lara. I’m excited to talk real estate.

Lara Rhame:
Absolutely. I have a selfish reason for doing this podcast (or perhaps maybe it’s more like a public service) because, I am often in advisors offices—it’s one of my favorite things to do, to talk to advisors and their investors—and I wanted to call today’s podcast “CRE: Mythbusting Edition.”

And Andrew kind of rolled his eyes at me. And this is really important because Andrew is an expert in this subject. He has written this piece, which as I said is a sequel. The original was one of our most successful, most widely circulated and most widely sent pieces that we have ever done in research.

So, when he redid it, it’s important to recognize (and I told him this), he’s in the weeds on this. And I am like out there, talking to investors who still have a lot of fear—a lot of uncertainty.

We know there’s a correction in progress. And I understand that, and I come home, or back to home (we’re in the office, but it feels like home, right?) I come back to our Philadelphia headquarters, and I say this to Andrew and he, you know, takes me through the nitty gritty of this sector and why it’s so different, why it’s changed, why this time is different, why this isn’t a repeat of the 2009 crisis. And so, I wanted to bring all of this together today: the big questions I get asked, and your expertise, and hopefully dispel some of these big concerns—and so that we can kind of get into the nitty gritty.

Andrew Korz:
That sounds great, Lara. And just to be clear, I must have had something caught in my eye. I would never roll my eyes at you.

Lara Rhame:
[Laughing] He rolls his eyes at me all the time. But all right. Today is February 2nd, 2024. Let’s just quickly set the stage. How is the CRE market doing today? I want to set the stage before I hit you with my big, scary questions.

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Andrew Korz, CFA

Executive Director, Investment Research

Lara Rhame

Chief U.S. Economist + Managing Director

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