Karissa Anderson, head of CML production at Aegon Asset Management, partook in a Q&A to discuss the commercial real estate (CRE) debt market, and to share insights on the current state of the sector and how investors and stakeholders are adapting to these changing market conditions.
In what ways has the CRE debt market been subdued, and what factors are contributing to this subdued state?
The largest contributing factor to the subdued CRE debt market is the current, heightened interest rate environment. Coupled with economic uncertainty, higher interest rates have muted acquisition activity. Sellers have not lowered their asking prices in the face of higher borrowing costs while buyers cannot achieve their economic hurdles with the current higher rates. The resulting standoff between buyers and sellers has caused acquisition activity to fall to a level far below where it has been over the past three to five years.