Commercial real estate is getting a lot of media attention, with most articles forecasting stormy weather ahead for the industry.
For example, the title of Goldman Sachs's recent podcast on this topic is Navigating the 'perfect storm' in commercial real estate.
The Wall Street Journal's Commercial Real-Estate Woes Run Deeper Than in Past Downturns is also gloomy. Key quote:
"Landlords are contending simultaneously with a cyclical market downturn and with secular changes in the way people work, live and shop. The sudden surge in interest rates caused property values to fall, while the rise of remote work and e-commerce are reducing demand for office and retail space."
Fortune's Office vacancy will increase by 55% by the end of the decade as hybrid and remote work push real estate to an 'inflection point' again paints a grim picture. Key quote:
"As much as 330 million square feet of U.S. office space could become vacant and unused by 2030 due to remote and hybrid work, according to a report released Wednesday by global real estate firm Cushman & Wakefield. When added to another 740 million square feet of space that will become vacant from "natural" causes, the total is around 1 billion square feet of unused office space building up over the next seven years."
And the retail industry continues to get hit by the shift to online shopping - and has to also deal with challenges related to remote work.
Yahoo Finance's Retail store closures 'to sharply accelerate going forward': UBS research covers a study that estimates that "50,000 retail stores will close out of the current base of 940,000 stores in the United States by 2027, excluding gas and food service stations."
If things turn out to be as dire as these articles are saying, it will have significant negative impacts on the overall economy.
We're more optimistic than these articles.
But small businesses and independent workers with exposure to the commercial real estate industry should think through how they will deal with a major downturn in the commercial real estate market.
Update The New York Times published A Bleak Outlook for Manhattan’s Office Space May Signal a Bigger Problem this morning. It's hard to keep up with all the gloom and doom commercial real estate stories these days.