A slow-motion crisis is unfolding in the global commercial real-estate market, thanks to the double-whammy of higher interest rates and lower demand for office space following the Covid-19 pandemic.

John Fish, who is head of the construction firm Suffolk, chair of the Real Estate Roundtable think tank and former chair of the Federal Reserve Bank of Boston, joined the What Goes Up podcast to discuss the problems facing the sector and what’s being done to help.  

“The biggest problem right now is the capital markets nationally have frozen,” he says of the US. “And the reason why they’ve frozen is because nobody understands value. We can’t evaluate price discovery because very few assets have traded during this period of time. Nobody understands where bottom is.”

One step in the right direction, he says, is recent guidance from federal regulators that allows lenders more flexibility when it comes to borrowers who need to refinance properties.