Real Estate

Commercial real estate troubles are so pronounced that Goldman Sachs’ CEO says even a soft landing won’t prevent ‘pain’

Joining CNBC’s Squawk on the Street on Monday, Goldman Sachs CEO David Solomon stressed that the economy has proved to be “incredibly resilient,” which has surprised him. However, there’s a certain sector that he sees as a risk.

After being asked about a Financial Times article reporting a surge in commercial real estate loan delinquencies in Goldman Sachs’ portfolio, Solomon told CNBC that real estate is the “single largest asset class in the world.” And as the Federal Reserve aggressively raised interest rates in an attempt to lower inflation, it has significantly affected the commercial real estate sector.

“There’s no question that the real estate market, in particular commercial real estate, has come under pressure,” Solomon said.

Solomon said that his bank has a relatively small lending portfolio compared to other lenders, but it does hold a reasonable amount of equity investments in real estate.

“Real estate affects us,”

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Real Estate

Downtown real estate and commercial buildings are struggling. Why won’t landlords lower the rent?

They call it the “debt wall,” and it is not the kind of wall that protects you. It’s the kind that might collapse and crush your village, or into which you might crash your car. Specifically, it is $1.5 trillion in commercial real estate debt, owed to banks, pension funds, and insurance companies before the end of 2025, and secured by a national portfolio of office, retail, industrial, and multifamily properties that may not be worth what they were five or 10 years ago when those loans got made.

The country’s downtown office buildings, as you may have heard, are in particularly dire shape. The return to the office has stalled, and many once-vibrant business districts have fallen on hard times. According to data from the brokerage Colliers, almost all of the biggest office buildings in downtown Los Angeles are underwater on their loans—meaning, their owners owe more to the

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