Life Insurers Curtail Funding Opportunities for CRE Developers

The Wall Street Journal reports that life insurance companies, which have historically been a reliable source of capital raising for commercial real estate developers, are scaling back their lending activity. This latest market trend comes amid rising office building vacancy rates and declining rents resulting from the increase in remote work. A Goldman Sachs Asset Management market survey found that 15% of insurers with commercial real-estate lending businesses plan to shrink their activity this year, more than three times as many as in the same survey last year. The lack of financing opportunities for CRE developers is only expected to worsen given that banks—the largest commercial property lenders—have scaled back CRE lending since last summer, a trend that has accelerated after recent bank failures.

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