The TreppWire Podcast: A Commercial Real Estate Show 329. America Downgraded: What Does it Mean? Appraisal Reductions and Trading Alerts Served with a Side of Optimism
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May 23, 2025 Dive into the implications of Moody's downgrade of the U.S. credit rating and mixed economic signals. Discover how Walmart thrives while Target faces challenges in retail performance. Explore the struggles of a Bay Area mall and encouraging leasing activities in Natick Mall. Witness the resilience in the office market with a significant Manhattan acquisition. Lastly, a major Phoenix hotel sale marks a bright spot amid ongoing value reductions in commercial properties. It's a mix of optimism and caution in the ever-evolving landscape of commercial real estate.
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Moody's Downgrade: Market Impact
- Moody's downgrade of the US credit rating to below AAA was largely anticipated and codifies bond market sentiment.
- This puts pressure on yields to remain around the mid-4% range, impacting commercial real estate financing costs.
Treasury Yields Pressure CRE Refinancing
- The high 10-year treasury yields around 4.5% plus create a refinancing challenge for lower interest mortgages.
- Despite the challenges, there is cautious optimism among CRE professionals about 2025 deal flow, though consumer sentiment decline poses risks.
Consumer Debt Fuels Economic Risk
- U.S. consumer debt levels and willingness to take on credit are unsustainable and problematic.
- Unless consumers exercise budget constraints, broader economic difficulties may ensue, impacting markets including CRE.