• A global recession likely has started. The U.S. also is expected to endure a recession, with GDP declines in the first and second quarter. CBRE sees the U.S. economy stabilizing in the third quarter, starting to recover in the fourth, and growing at stronger rates in 2021 due to pent-up demand.
  • CBRE foresees unemployment rising to above 6 percent from 3.5 percent by mid-year, registering a loss of as much as 8 million jobs.
  • The federal stimulus package of $2 trillion and the associated liquidity support will prevent worst-case economic scenarios from happening and will underpin the recovery.
  • Transaction volumes for commercial real estate are declining, bidding pools are smaller, and sellers are delaying bringing assets to market.   Repricing asks have increased as have deals that have fallen out of contract.
  • Debt financing remains available, albeit constrained. Government-sponsored entities (Fannie and Freddie), banks and life-insurance lenders generally have ample capital with minimum interest-rate floors or higher spreads. CMBS and debt funds are under duress; some have exited while others are repricing.
  • Office leasing will slow in the short term, vacancy will rise, and demand will  increase for agile workplace offerings. Greatest impact will come in markets with high concentration of oil & gas and travel & leisure jobs. There is less new office construction in this cycle, which will aid the sector’s recovery.
  • Hotel revenue will decline by an average of 37 percent for 2020, with a recovery beginning in 2021. Impact will be greatest in gateway cities with substantial tourism and convention business. Some hotels may be converted to uses as medical and quarantine facilities.
  • The economic slowdown will negatively affect most retail, especially retailers and centers already struggling to compete with e-commerce. There is resilience and strength in grocery-anchored and pharmacy-anchored centers. The eventual removal of social-distancing requirements might cause a surge in pent-up demand.
  • Industrial & Logistics will see a short-term slowdown in leasing, but rents will hold steady. The sector will be a net beneficiary due to strong e-commerce growth and retailers diversifying their supply chains.
  • Strong demand endures for multifamily assets. Pressure will emerge for most property types due to job losses and resulting economic hardship. 


Attributable to  Richard Barkham, Global Chief Economist and Head of Americas Research

“A short-term shock to commercial real estate values and operating conditions is inevitable in this crisis. We anticipate that the most extreme impacts will start easing by the end of the year. Some commercial asset classes, such as hotels and certain areas of the retail sector, already are showing severe impacts. Other effects, such as a slowdown in office leasing, will take longer to manifest.

“There are multiple signs that the economy and then commercial real estate will recover quickly once the virus’s spread abates. Governments are enacting major fiscal and monetary responses to bolster the economy, and we believe that even more aggressive and targeted support for households and businesses will follow.

“We expect the U.S. economic trajectory to follow a sharp decline giving way to a rapid bounce back and then a solid, longer-term recovery. While there may be some commercial mortgage defaults, the Fed has put policies in place to ward off a credit crunch.

“For many sectors, the recovery should be under way before the end of this year, driven by pent-up demand. Although the near term looks brutal, the medium-term outlook is more favorable because there are no structural flaws in the macro economy or in commercial real estate.”