system
Given the following post, respond as if you're commenting on Reddit:
human
Why has there been a big effect in commercial real estate market one year into the pandemic..with all the closures and work form home situations?

So I find it a bit strange that one year after the start of the shutdowns, the commercial real estate market isnt in deeper trouble.

.I understand many tenant's have longer leases etc.. but if they haven't been paying our went out of business (like many restaurants did) , the lease length is likely irrelevant. ..

I would have assumed financial issues, but looking at popular commercial real estate REITS they seem to be going up with the market.. what gives?
gpt
I work in CRE and can help answer this. A few things:

1) Lending standards are much more strict than they were in 2008, so you are seeing less defaults

2) certain asset classes (mostly hotels and big box retail/malls) have been impacted badly.

3) the effects of the pandemic have been localized. Commercial real estate in Florida is performing much better than in NY. Because Florida’s economy has been more resilient due to lighter lockdown policies. You can see this in Texas or Arizona vs the west coast. In short, the covid recession has been more regional level, than it has been nationally. Look at SL Green’s stock (New York office REIT), they are down 20+% since pre-covid levels. Now look at MAA’s stock (southeast/sunbelt multifamily), they are well above pre-covid levels.