(Bloomberg) -- TCW Group Chief Executive Officer Katie Koch expects further dislocation in commercial real estate, a market that has continued to under-perform as US workers remain reluctant to return to the office full time.

“One-third of the supply has to be taken out of the office market,” Koch said Thursday at CNBC’s Delivering Alpha conference, where she also pointed out that $1.5 trillion of commercial mortgage-backed securities are maturing soon and need to be extended.

The commercial real estate market has been hammered by the shift to hybrid work, rising interest rates and difficulty accessing credit after a US regional banking crisis in the spring. Still, Koch said that there are a few good properties of interest to employers who are trying to lure workers back to the office.

The TCW chief also has a bearish outlook on the economy as a whole, saying that it’s “more likely to deteriorate than consensus” and that an upcoming recession is inevitable as interest rates remain elevated and pressure consumers.


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