This Depression 2.0 is driving dramatic & long-term changes in the commercial real estate industry as companies cut overhead costs by keeping employees working from home.
These changes not only pose threats to the companies that build and lease office towers, retail centers, industrial complexes and apartment buildings, but also to the banks, life insurance companies and pension funds that invest in them.
Ultimately, how far the crisis and the disruptions it causes reach into the financial system could determine how quickly the commercial real estate sector recovers from the downturn.
Commercial real estate investors are confronting issues similar to those faced by investors in residential real estate in the years leading up to the housing bust of more than a decade ago. As with homes, most commercial properties are purchased with mortgages, which are then bundled into securities and sold to investors, whose returns depend on property owners making their monthly payments.