The impact on commercial real estate from coronavirus is still being calculated, The Wall Street Journal reports: “A recent Citigroup report on 400 properties in the retail and hotel sectors found an average decline in value of 27%. The stock prices of real-estate investment trusts, companies that own equity in commercial properties, are down 42% for retail properties since the most recent valuation prior to the pandemic onset in March. Office-property REITs are down 36% and lodging property REITs are down 50%—all despite the recent stock-market rally on vaccine news.”
But there are glimmers of hope: “It isn’t all bad news. Businesses like Amazon have prospered, boosting demand for warehouse and distribution space. Stock prices for data-center REITs are up 23% this year, and industrial REITs are up 9%. But those types of properties command much lower rents than office and retail. And strong performance of one type of property is modest comfort for a lender facing losses on retail, office or lodging properties.”
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