Scott Rechler has become somewhat of a spokesperson for the commercial real estate industry.
The chief executive officer of RXR told with Bloomberg TV the industry is facing a “new paradigm” on the back of interest rate spikes and ahead of the Fed’s expected rate cuts.
In the case of the multifamily sector, Rechler said it will require “writedowns and equity injections” after higher interest rates and stagnating rents have broken capital stacks.
“There’s going to be waves of loans that mature and need to be recapitalized, restructured,” Rechler said. “That’s going to be a multiyear process.”
Multifamily has seen a boom in supply in recent years, but high interest rates have depressed deliveries and demand could outpace supply by 2026. Before then, Rechler said “the broken capital structures” in the sector could provide investor opportunities to buy into multifamily.
RXR’s head honcho said real estate has settled into an elevated interest rate environment, and forecast the Fed’s expected cuts as a normalization that will require recalibrating both values and capital structures.
The first steps towards such a reset could be coming this month, after chair Jerome Powell said in August the central bank would start lowering rates.
“The time has come for policy to adjust,” Powell said. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
Rechler has also been a dire voice in the office sector and called commercial real estate a slow-moving train wreck. He recently told The Real Deal that the mission in the industry is becoming “survive through ’25,” adding, “the fix will come in ’26.”
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