“Pressure in the office sector and tightening lending standards are challenging US commercial real estate, contributing to deterioration in economic growth prospects and financial sector vulnerabilities. While the pressure is unlikely to pose systemic risks, we expect the correction to last several years”, IA Prime cites the document.
According to the institute experts, small US banks face additional vulnerabilities, and there is a risk of further asset deterioration in the event of an economic downturn.
“The office sector is under the most stress due to the growing risk of default on the loan, difficult situation with refinancing and reduced appetite for additional investment in equities,” the report added.
According to Swiss Re, the reduction in the number of available offices will put pressure on both small banks and insurers, but the problems are expected to be “more drastic” for the first and “unlikely to pose systemic threats” to financial stability.
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