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Pimco says ‘storm is brewing’ in U.S. commercial real estate

Prices may fall as much as 5% in the next 12 months amid tightened regulations, a wall of debt maturities and property sales by publicly traded landlords.

By John Gittelsohn, Sarah Mulholland | Updated on June 20, 2016
A luxury 90-floor apartment skyscraper called "One57," left, rises above all other buildings overlooking Central Park, while a crane sits atop ongoing construction for a new condominium skyscraper at 220 Central Park South, Thursday May 26, 2016, in New York. A penthouse in One57 went for $100.5 million in 2014, but an apartment in the new condominium is expected to sell for $250 million. (AP Photo/Bebeto Matthews)

(Bloomberg) – U.S. commercial real estate prices may fall as much as 5% in the next 12 months amid tightened regulations, a wall of debt maturities and property sales by publicly traded landlords, Pacific Investment Management Co. said in a report Monday.

A global surge in demand for U.S. property investments that pushed real estate values to records may wane as slowing growth in China, lower oil prices and dislocated debt markets threaten to halt six years of price growth, Pimco portfolio managers John Murray and Anthony Clarke said in their report, titled “U.S. Real Estate: A Storm Is Brewing.”

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