Tenants continue to downsize with the hybrid work model showing more staying power, battering the office sector. The Federal Reserve’s interest rate hiking cycle has also wounded commercial real estate.
“The office stress isn’t quite done yet,” Thomas LaSalvia, Moody’s head of commercial real estate economics and an author of the report, said in an interview Tuesday. But, recent positive economic indicators are helping to prevent a perfect storm in the office sector, he said.