US banks have expressed concerns over falling real estate valuations, as rising interest rates continue to take their toll on the office sector.
Although financial executives did not predict any systemic risk, the impact of falling office values was their biggest concern, according to the Financial Times.
“The question we all have is whether contagion will spread from the office sector,” Bryan McDonnell, head of PGIM’s real estate debt arm, told the paper. “If you get to a confidence issue then, all of a sudden, people might put all commercial real estate in the same bucket.”
