FICC Focus
CRE Sentiment and Risks with CREFC’s Pendergast: Macro Matters
Feb 27, 2025
Lisa Pendergast, President and CEO of CREFC, offers keen insights into the commercial real estate landscape. They explore the shift in market sentiment post-COVID-19, highlighting a newfound confidence despite economic uncertainties. The conversation dives into potential office-space conversions amid rising interest rates and the factors driving changes in supply absorption. Pendergast also discusses the complexities of commercial loans and the challenges facing older properties versus newer constructions, providing a comprehensive understanding of current trends and future outlooks.
37:43
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Quick takeaways
- The commercial real estate sector exhibits a cautious optimism with a 5% increase in sentiment index, indicating recovery post-COVID-19.
- Challenges in the office market persist with rising delinquency rates, particularly impacting older properties amid shifting tenant occupancy trends.
Deep dives
Current Market Conditions in Canada and the U.S.
Recent economic data from both Canada and the U.S. reveals notable trends impacting the fixed income markets. In Canada, the economy appears stable but could face turbulence if trade tariffs are enacted, potentially leading to a sharp decline in rates. Meanwhile, U.S. GDP growth showed surprising strength, evidenced by an upward revision of core GDP price index, indicating persistent inflation. As the Federal Reserve contemplates interest rate cuts amid concerns of an economic slowdown, the U.S. market may remain range-bound, complicating the outlook for sustained rallies.
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