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Commercial real estate flounders as housing market booms

September 22, 2020. Summarized by summa-bot.

A pedestrian wearing a protective mask walks past a storefront with a "For Lease" sign displayed on Market Street in San Francisco, California, U.S., on Thursday, Aug. 6, 2020. U.S. consumer sentiment extended its slide in late July as the resurgent coronavirus led to renewed business closings and layoffs, adding to signs the economic recovery is stalling. Photographer: David Paul Morris/Bloomberg via Getty Images

The housing market is red hot thanks to record-low mortgage rates and consumers looking to flee cities for the suburbs. But offices, shopping malls and other commercial real estate properties have been hit hard by the coronavirus pandemic.

But offices, shopping malls and other commercial real estate properties have been hit hard by the coronavirus pandemic.

"There will likely be less demand for commercial real estate due to the rising popularity of online shopping and working from home," said Ivy Investments global economist Derek Hamilton in an e-mail.

That's why giant corporate real estate firm Brookfield Property Partners (BPY) said it will lay off 20% of the 2,000 employees in its retail arm, which owns malls and other shopping centers that include Tysons Galleria in Virginia and the Grand Canal Shoppes at The Venetian Resort Las Vegas.

Some parts of retail are even holding up well, said Michael DeGiorgio, founder and CEO of CREXi, an online real estate marketplace that has partnered with Leon Capital Group.

The office side is still up in the air," said Ivan Kaufman, CEO of Arbor Realty Trust (ABR), a real estate firm that invests in mortgages tied to commercial real estate and multifamily apartments.

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