Commercial Real Estate Crash Will Trigger Recession and “Force The Fed To Restart QE”

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Commercial Real Estate Crash Will Trigger Recession and “Force The Fed To Restart QE”
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Morgan Stanley predicts a 40% collapse of the Commercial Real Estate (CRE) debt market—a credit crunch will trigger the next round of bank failures. US securitized CRE debt (estimated at between $1.35 and $1.45 trillion) matures by year-end 2025 and U.S. banks are estimated to hold possibly as much as 42% of that debt. The implosion across the office sector is the ticking time bomb facing not just small and regional banks, but the broader US economy as well: a “boa constrictor.” With the commercial real estate bubble bursting, we are likely to enter three years with low growth, similar to what we saw after the housing bubble burst in 2008.

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