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Apartment and Warehouse Deals Start to Sputter as Rates Sting

With prices heading down and sales falling through, ‘feels like a Wile E. Coyote moment’ for US commercial-property market.

Warehouses in Redlands, California.

Warehouses in Redlands, California.

Photographer: Roger Kisby/Bloomberg
Updated on

Real estate prices are sinking, deals are collapsing and lenders are tightening their fists. Even commercial-property darlings like apartments and warehouses, where values soared through the pandemic, are losing steam as interest rates climb. 

Steven Lurie, a Los Angeles real estate attorney, said deals by clients for an industrial property in Portland, Oregon, and apartments in Denver fell apart as rates rose in May. In June, a buyer withdrew a nearly $18 million offer for a new apartment building near Los Angeles. A backup offer came in this month for 10% less.