Posted on 12/08/2022 9:28:44 PM PST by SeekAndFind
Leading up to the Covid-19 pandemic, roughly 95% of commercial office space was occupied across the United States, according to US National Bureau of Economic Research (NBER) – a nonprofit, non-government organization. By March 2020, occupancy plummeted to 10%, and has only recovered to 47%, according to a new NBER report which claims $453 billion in office commercial real estate value has been wiped out in an "office real estate apocalypse."
Around the US, that resulted in a 17.5 percent decrease in lease revenue between January 2020, and May 2022, and not only because fewer offices were being occupied, but also because those that are being rented are going for shorter terms, lower prices per month, and a lot less floor space is needed as staff are told they can work from home for most or all the week.
Prior to the pandemic, 253 million square feet were rented per year; as of May 2022, just 59 million square feet had been rented, NBER's data indicates. "This indicates a massive drop in office demand from tenants who are actively making space decisions," NBER said. -The Register
What's more, while vacancy rates have hit a 30-year high, 61.7% of in-force commercial leases haven't come up for renewal since the pandemic - meaning that "rents may not have bottomed out yet."
What this means is that commercial real estate - a popular choice for pension fund managers and investors alike - may not be the best idea for the foreseeable future, given the continuing work-from-home options adopted by corporate America.
A common method used to invest in office real estate is commercial mortgage-backed securities (CMBS), which are managed and traded via commercial mortgage-backed indexes (CMBX) made up of pools of CMBSes.
According to NBER, more recent CMBXes tend to include a higher percentage of office collateral than earlier vintages. Those newer, office-heavy CMBXes, NBER said, are what's losing the most money. -The Register
NBER says that in 2019, commercial real estate assets topped $4.7 trillion - offices being the largest component.
Read the report below:
I see Blackrock as more evil. Blackstone no.
NEXT-—Government will be demanding that open spaces be given to HOMELESS.
BEST CHRISTMAS OF ALL TIME, IMO.
Oh. I mixed them up.
:-)
I know you. You’d stop and lay ceramic tile to make the floors suitable for walking on.
Interestingly, the cost savings was a small part of my decision. What really drove this decision for me was the abject idiocy of doing business in any jurisdiction where a governor or mayor could simply declare my business “non-essential” and tell me I had to close it down for an indefinite period of time. No ‘effing way was that ever going to happen.
Ties are joke from my perspective. An outdated stupid ribbon men use to wear around their necks. I look at ties nowadays as outdated, archaic fashion nonsense. I don’t want to look like my head is popping out of gift or package tied with a ribbon. All I wore for years was just sports coat, as casual as possible and 98 percent of the time, never a stinking tie.
BS Covid travel regulations imposed by Trudeaus cabal of socialist/marxists “controllers” kept me out of Alaska (and Alberta) for two years. So, I have REAL sympathy for what you are saying.
There’s probably hundreds of thousands of people like me. If so, imagine how much lost revenue that cost small businesses in Canada. Like me, they just stayed home and didn’t spend millions/billions in Canada during the scamdemic.
Good read.
I won’t argue your point, because it is a bit different from what I was saying. Young people (not data just opinion) seem satisfied with smaller living spaces. They have no interest in dusting Grandma’s antique bird collection.
Easily converted to residential.
They’ll need to find other work or different businesses. Millions working from home is not going anywhere...If anything, it will expand to millions more doing the same.
As I predicted in April 2020. The ripple effect of this will be felt for decades
They’ll want to come back eventually. Remote work can de unproductive and there are a myriad of issues tech problems. Can’t control access to their servers with so many remote workers using different providers.
My wife has issues at home weekly with spam. And the constant password changes are getting ridiculous.
Some of us have to come back. My telehealth care business is now being forced to return to a physical space. The problem is, huge buildings now sit empty and there is no small office space to rent — at ALL. No one owns the buildings now, except the banks I suppose.
The scandemic converted many workers into work-from-homers. Now that the plague is receding, former commuter-workers don’t want to return to the democrat hunting grounds. So now the Bidet administration is proposing to relocate the hunter-class into suburban bedroom communities, reuniting the once prey, with their adversaries. Things will escalate.
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