Too many commercial real estate towers in big cities are averaging 50% vacancy. This is not sustainable. These properties are highly leveraged. The owners traditionally make their money by borrowing on the equity and flipping properties. Works well when demand was high and rents and values seemed to always increase.Problem is now there is not enough rental income to cover the loans and interests rates are rising. Banks are hurting, urban real estate taxes are down as is ridership on most urban public transportation networks. The silicon chip has made central, urban commercial centers non essential. You can conduct most business from anywhere.
I’m in Ft Worth and the central business district construction rate is insane. Most of the new construction is residential high-rise and medium-rise apartments. I know that the demand is not THAT high for residential units, considering the rent for one is insanely high. People have cars and don’t need to walk to work. I’m predicting 50% occupancy tops.
Yeah, it’s completely unsustainable.