Posted on 06/26/2023 12:13:01 PM PDT by dennisw
San Fran and Manhattan - with owners set to default on billion-dollar loans this year Values for offices are down 27 percent since March 2022, according to experts $1.5 trillion in real-estate mortgages will come due within the next two years Office availability in San Francisco soared to 32.7 percent in the first quarter
Commercial real estate has become a debt timebomb, experts have warned, as office towers remain empty in once-bustling cities.
The new era of remote work means 'zombie' workspaces remain vacant - while higher interest rates make it more expensive to buy or refinance buildings.
Some $1.5trillion in real estate mortgages are due this year and next, bringing the market to a dangerous precipice. When the deadline arrives, experts warn owners may be forced to default instead of borrowing again to cover the bill.
Earlier this month, the landlords of downtown San Francisco's Westfield mall stopped making mortgage payments on its $558million loan amid rising crime and tanking sales.
Meanwhile in New York, building owners are being forced to negotiate extensions on millions of dollars of debt after failing to secure financing.
The owners of the Seagram Building, a 1950s skyscraper in Midtown Manhattan which is renowned for its modernist design, had to get a one-year extension on $1 billion of debt set to mature this year, according to Bloomberg.
Developer GFP Real Estate reportedly received a two-year extension on the art deco DuMont building after being unable to repay the building's $103 million mortgage when it came due.
(Excerpt) Read more at dailymail.co.uk ...
The consequence of COVID shutdowns.
San Francisco's largest hotel, the Hilton Union Square, left, is set to be foreclosed upon as the owner of the hotel and Parc 55, right, announced that it will no longer make payments on its $725 million loan
It sounds like a perfect storm.
Companies are not wanting to lease as much office space, because of work from home trends, and that causing a declining demand for office space. In addition, cities becoming more dangerous may well cause companies to avoid downtown and big city areas, for the office space they do need.
And it sounds like owners of these buildings are going to have lots of trouble making their mortgage payments on those buildings, if they aren’t getting rental income from leasing the office space.
Tough times are ahead in commercial real estate.
And that will have a downstream effect on small businesses in cities who rely on office workers - so cities are going to get even worse.
It’s not just big cities. My suburb of Nashville now has over 1 million square feet of empty office space.
“But, but, but . . pay your debts!”
All the Freepers who screetched about folks walking away from underwater mortgages last time around . . .
If you borrow a pile, write off a pile, and pocket a pile, who gives a shiite what happens to the loan, it’s just other people’s money.
Just regroup as a new Corporation and buy the thing back for half the price.
Lessons learned?
1 - Never Buy Anything In Your Own Name
2 - Mortgage to the balls, Triple Net Lease to cover it all
3 - when SHTF, dump it and walk away clean
rinse repeat
The 2017 tax law which created Opportunity Zones is going to have an interesting impact.
There will be much lower demand for the fancy address locations.
Real estate tax collections could decrease by a lot.
Manhattan office space can be converted into multimillion-dollar residential apartments for billionaires and temporary storage spaces for shoplifted goods.
San Francisco offices can be converted into homeless shelters, flop houses, and crack dens.
Albuquerque
Atlanta
Baltimore
Baton Rouge
Boston
Bridgeport CT
Buffalo
Camden NJ
Charlotte NC
Chicago
Cleveland OH
Columbus OH
Dayton
Detroit
Durham NC
El Paso
Erie PA
Ft. Wayne IN
Gary IN
Greensboro NC
Harrisburg PA
Hartford CT
Houston
Jacksonville
Jersey City
Kansas City
Laredo
Los Angeles
Madison WI
Memphis
Miami
Milwaukee
Minneapolis
Nashville
New Orleans
Newark NJ
Norfolk VA
Oakland CA
Philadelphia
Pittsburgh
Portland
Seattle
Scranton PA
Spokane
Springfield MA
St. Louis
Stockton CA
Toledo OH
Trenton NJ
Tulsa
Washington D.C.
etc.
People who work at home and never have to deal with traffic and time wasted during their commutes as well as business owners who can save on paying rent for office space are not concerned.
Sometimes it takes a mega event like the pandemic to shift realities and customs.
With today's technology, many people don't need to go to the office. It was always easy for programmers etc to not go to the office, but now with the preponderance of cell phones and video meetings a whole other group of employees join the mix. The pandemic also taught us that government leaders really like totalitarian policies and the sheeple will follow
There are still worn out ten year old signs on some lamp-posts in Hartford:
They read “New England’s Rising Star”....
The city probably can’t afford to pay staff to tear down the signs....
Lol.
Albany NY still has “All American City” signs, whatever that means.
Companies that built office buildings took a risk and in that risk they failed to take into account that technology would decrease the need for office space.
True, but they could have absorbed the decrease, perhaps, over time. The Pandemic ripped the band-aid off the wound.
Not unlike the pandemic revealed the crap product the public schools put out.
Meh... Biden will bail them out.
Not unlike the pandemic revealed the crap product the public schools put out.
The pandemic also brought on this transexual tsunami. The woke learned that if they presented something as science, they can force it on the people.
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