(Bloomberg) -- Jamie Dimon said problems in commercial real estate will be contained to “pockets” of the sector as long as the US avoids a recession.

Many property owners can handle the current level of stress, the JPMorgan Chase & Co. chief executive officer said on CNBC Monday. Lower valuations tied to higher interest rates is “not a crisis, it’s kind of a known thing,” he said in an interview at his firm’s annual high-yield and leveraged-finance conference in Miami.

“If we don’t have a recession, I think most people will be able to muddle through this, refinance, put more equity in,” Dimon said. “If rates go up and we have a recession, there will be real estate problems, and some banks will have a much bigger real estate problem than others.” 

Concern over commercial property intensified in recent weeks after New York Community Bancorp slashed its dividend and set aside more than 10 times what analysts expected for soured loans. Investors are now racing to assess the vulnerabilities at other US banks. 

Dimon said that higher defaults are “just a normalization process,” after a long period of low default rates. 

Read More: Commercial-Property Loans Coming Due in US Jump to $929 Billion

©2024 Bloomberg L.P.