The U.S. commercial real estate market is at a critical crossroads, transformed by the aftermath of the pandemic and shifting economic conditions. Faced with rising interest rates, tighter lending and continued volatility, traditional investment strategies are not working, especially for those carrying heavy debt.
In this climate, industry experts say taking a passive, wait-and-see approach is no longer viable. Hoping for a market recovery offers few benefits, and a broad reluctance to sell has led to a significant drop in market liquidity, which is crucial for the sector’s overall viability.
“There was virtually no trading. Liquidity basically dried up,” notes Jeff Giller, partner and head of real estate at StepStone Group, a global private markets investment firm. He says the result was a “completely chilling effect” that stalled sector-wide activity.
The current market downturn — triggered by the Federal Reserve’s interest rate hikes in early 20
