Let’s start with the big picture. The yield curve, particularly the 10-year/3-month Treasury yield spread, is behaving in a way that historically signals a recession is imminent. This curve has started to de-invert, a change that usually happens just a few months before the economy takes a downturn. The market is essentially telling us to brace for slower growth. The Fed’s interest rate decisions, while aimed at keeping inflation in check, have the side effect of putting the brakes on spending and investment.The impact on commercial real estate will be mostly negative. Office space may see even more reduced demand due to cost-cutting by tenants. Retail faces risks with increasing consumer debt, but strong fundamentals could provide some resilience. The industrial sector may experience slowed demand but likely without significant rent drops, while the multifamily sector is encountering supply issues, though a major downturn seems unlikely.
Source: Commercial Real Estate Braces for Impact as Yield Curve Suggests a U.S. Recession – Propmodo
