The COVID-19 crisis and economic fallouts are still developing, and the ultimate impact of the outbreak on the economy and the commercial real estate sector remains uncertain. At this point, Clarion Partners considers the fundamentals in place before the crisis, and early impacts of the crisis, to analyze how ODCE weightings may shift in response.
Clarion Partners believes the unprecedented monetary- and fiscal-stimulus programs, and the transitory, self-induced nature of the shutdown, are factors that will facilitate an economic recovery.
Pent-up demand would also encourage a rebound once the outbreak subsides and/or is treatable. Pre-crisis, U.S. commercial real estate had near cycle-low vacancy rates and attractive pricing relative to Treasuries and investment-grade bonds, which may help mitigate some negative impacts. More importantly, U.S. financial institutions are not over-leveraged, thanks to tighter financial regulations after the global financial crisis. Curr
