Weakness in the commercial real estate industry poses risks to the recovery of the US banking sector, JPMorgan & Chase CEO Jamie Dimon warned during the bank’s investor conference Monday.
Impacted by the slew of bank failures, the commercial real estate industry has faced several headwinds in recent months, including high-interest rates, tighter credit conditions, and rising office vacancy rates due to work-from-home trends. These factors are fueling worries about potential loan defaults by commercial property loan borrowers.
“There’s always off-sides,” Dimon said. “The off-sides, in this case, will probably be real estate. It’ll be certain locations, certain office properties, certain construction loans. It could be very isolated; it won’t be every bank.”