The company's recent report points to several factors that could lead commercial real estate prices to fall as much as 5 percent in the next year.
CRE's had a good run for some years, but now it's time for predictions of worse times to come. According to Pacific Investment Management Co., commercial real estate prices may fall as much as 5 percent in the next 12 months. A number of factors are coming together to drive the market that way, the company said: tightened regulations, a surge of debt maturities and property sales by publicly traded landlords.
Now capital flows are growing unstable, Pimco says. A number of factors are vexing the flinty hearts of moneymen: fears over interest rate hikes, political and economic uncertainty in China, and most recently, Brexit. "While this instability began in the public CRE markets, it has blown in to private CRE as well, particularly in non-major markets," asserts the report.