As commercial real estate comes under even greater pressure, investors should steer clear of these stocks that are overexposed to the sector, JPMorgan said. Commercial real estate is already facing more challenges this year than other parts of real estate, such as retail or lodging. In fact, office REITs were down 0.64% this year on a total return basis as of Feb. 28, according to Nareit data . Last year, office real estate dropped 37.6%, also on a total return basis. Meanwhile, industrial REITs are up more than 8% this year through February, while retail REITs added more than 2%, Nareit said. Those pressures are set to mount as commercial real estate, already dealing with higher interest rates and fewer workers showing up at offices, deals with the regional banking fallout. “Though office CRE has been in a multiyear decline, pressures are now intensifying from higher rates, hedging costs, declining property prices, business cycle slowdown, and secular demand disruption (e.g., office vacancy of 13% and total availability of 16% are at [global financial crisis] level),” Dubravko Lakos-Bujas said to clients in a note Monday. “The banking shocks should only amplify these pressures and could complicate the debt roll given that sizeable CMBS office loan maturities are coming due in 2023-2024,” he said, referring to commercial mortgage-backed securities. In fact, the analyst expects that the maturity profile for CMBS will “materially pick-up” in 2024 and roughly double before topping off in 2026. However, small- to mid-cap banks, which are the largest lenders to commercial real estate, will have little flexibility to lend to the sector, the analyst said. “In fact, SMid banks were actually growing their CRE loans books despite a slowing economy in 2022, which suggests that the magnitude of the second derivative loss of credit availability to CRE could be more pronounced than expected,” according to the note. “While options remain for borrowers/lenders to seek modifications (e.g., extend loan terms to avoid flood of distressed sales), a string of recent defaults should be interpreted more as an opening salvo as opposed to a one-off event,” it continued. Given this, JPMorgan screened for a basket of stocks with direct and indirect exposure to U.S. commercial real estate. Here are 10 of them. Caterpillar has direct exposure to commercial real estate. In fact, on Monday, Baird analyst Mircea Dobre downgraded Caterpillar to underperform and slashed his price target to $185 from $230. The analyst told investors to sell the machinery stock, as construction is “likely to experience a meaningful slowdown into 2024.” “A 2024 slowdown in U.S. nonresidential construction was already on the horizon but now is increasingly likely given ongoing regional lenders’ turmoil and their sizable participation in commercial construction lending,” Dobre wrote to clients. Office REITs Boston Properties and SL Green Realty both have acute exposure to refinancing risk. Last week, Barclays downgraded the two, saying they have more near-term maturities. Barclays’ analyst Anthony Powell double downgraded SL Green Realty to underweight from overweight and downgraded Boston Properties to equal weight from overweight. “In an environment when borrowing and refinancing gets tougher and more expensive, the best place to be is not requiring a lot of financing (few near-term maturities). After looking at our entire coverage universe, we found that by most metrics, office REITs tended to have the most near-term maturities; in particular, SLG and BXP have $2.2 billion and $1.8 billion in 2023/2024 debt maturities, respectively,” Powell wrote in a March 23 note. “Given uncertainty regarding office leasing demand and values, we expect working through these maturities will lead to higher than previously expected interest costs,” Powell added. JPMorgan also identified pharmacy store chains Walgreens Boots Alliance and CVS Health as having direct exposure to any slowdown in commercial real estate. Other stocks included on the list included Trimble and Vornado Realty Trust .