Commercial real estate still under pressure
The boss of the UK’s 3rd largest real estate investment trust (REIT) has warned that UK office values are melting like “ice cubes”, as shorter leases, stricter environmental criteria, and higher tenant expectations weigh on property values. With the rise of remote work, that slowdown is hardly a UK-only phenomenon.
Indeed, commercial property bargain hunters in the US have reportedly been buying office buildings at discounts of up to 70%, as office vacancy rates hover close to 20% in America. That foundational weakness has weighed on real estate stocks, with the XLRE, an ETF designed to track the real estate segment of the S&P 500, down 3% in 2024. That makes it the only S&P 500 sector in the red.
Indeed, commercial property bargain hunters in the US have reportedly been buying office buildings at discounts of up to 70%, as office vacancy rates hover close to 20% in America. That foundational weakness has weighed on real estate stocks, with the XLRE, an ETF designed to track the real estate segment of the S&P 500, down 3% in 2024. That makes it the only S&P 500 sector in the red.
