Marcus & Millichap: What bank shutdown means for CRE
Research - MARCH 14, 2023

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Marcus & Millichap: What bank shutdown means for CRE

by Andrea Zander

Recent troubles in the technology and cryptocurrency sectors, of which Silicon Valley Bank (SVB) was a prominent financier, led to major deposit outflows at the bank, forcing the institution to sell bond holdings before their maturity to procure cash to cover these withdrawals. Due to the Federal Reserve’s rapid interest rate increases over the past 12 months, bond prices have fallen, and SVB realized a loss on those sales. When the bank next tried to fill a $2.25 billion shortfall with a stock sale, a wave of depositors worked to pull out their cash, at which point regulators stepped in.

What the bank shutdown means for commercial real estate

Marcus & Millichap believes the commercial property performance outlooks will generally remain positive. However, the due diligence on commercial real estate lending will tighten, at least for the near term, pushing up spreads beyond already-high base lending rates. This could widen the extant expectations gap between buyer

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