Commercial-property losses will add to banks’ woes

Ask an investor to describe the outlook for commercial property and you will get a colourful response. “Office is a dumpster fire,” says Daniel McNamara of Polpo, an investment fund. His view of the wider market, which includes shops and warehouses, is only a little less grim: “It really is the perfect storm.” Tom Capasse of Waterfall Asset Management, an investment firm, has nicknamed places where the tech bubble has burst, including San Francisco and Seattle, “office hell.”A combination of nasty events has produced this hellish-perfect-dumpster-fire-storm. The lingering impact of covid-19, which kept shoppers away from malls and workers at home, has undermined the value of shopping centres and offices; all real-estate valuations are undermined by higher interest rates, which push up landlords’ expenses. These woes have been added to by the recent banking turmoil and fears of a recession in which workers are laid off and their former employers downsize.