The Daily Money: Commercial real estate is heading for a crisis, Morgan Stanley analysts say
Happy Monday, Daily Money readers. It’s Bailey Schulz here to bring you the day’s top headlines.
Even before Silicon Valley Bank’s collapse in March, the commercial real estate market was dealing with a host of challenges: dwindling demand for office space brought on by remote work. An increase in maintenance costs. Climbing interest rates.
Now, with more than half of the $2.9 trillion in commercial mortgages up for refinancing in the next couple of years, experts say the situation may get worse soon.
“Even if current rates stay where they are, new lending rates are likely to be 3.5 to 4.5 percentage points higher than they are for many of CRE’s existing mortgages,” wrote Morgan Stanley Chief Investment Officer Lisa Shalett in a recent report.
The report said commercial property prices could fall as much as 40% “rivaling the decline during the 2008 financial crisis."
“These kinds of challenges can hurt not only the real estate industry, but also entire business communities related to it,” Shalett said.
Commercial real estate includes office buildings, shopping centers, multi-family apartments, hotels and data centers.
Teslas just got cheaper – again
Tesla slashed prices in the U.S. again last week, cutting prices between 2% to nearly 6%, with the largest cuts on Tesla's more expensive Model S and Model X vehicles.
The price cuts come after Tesla said it delivered a record 422,875 vehicles worldwide in its first quarter after previous rounds of price cuts.
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Bad news for hot sauce fans: The Sriracha shortage is back.
Drought conditions in Mexico last year caused a shortage of red jalapeño peppers used to make the hot sauce. Production was able to resume in the fall, but the Southern California company that produces one of the most popular Sriracha sauces warns it is now experiencing an “unprecedented inventory shortage.” With limited supplies, some retailers are rationing how many bottles shoppers can buy.
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Each weekday, The Daily Money delivers the best consumer news from Paste BN. We break down financial news and provide the TLDR version: how decisions by the Federal Reserve, government and companies impact you.