Posted on 10/03/2022 4:27:33 PM PDT by FarCenter
It’s always been there. Especially in the fashion district where there are countless companies who make their own apparel. DL1961 or Joe’s jeans as examples where they have the Made in USA label.
There is extremely limited availability of warehouse/industrial space... and what IS available is 30%-50% more than it was in 2019. I locked in at $0.95/sq ft but the going rate is now at least $1.35 or more and that’s for a large space. If you just want a few 1000 sq ft it’s very high. Of course, I want it to come down.
Home prices are softening a bit, depending on where you look. I saw a motivated seller knock 10% off the ask. Was still expensive. Others are moving down but not many that aggressive yet.
“$0.95/sq ft”
HECK, I’ve seen $2.50 and they’re fighting over that space on maple ave. / and even San Julian in the fashion district. Mostly Iranian jews spoke with just recently before they head to Yom kippur by sun down tomorrow..
“Here in L.A. it’s the REVERSE. They are selling / leasing warehouse space for ecommerce and manufacturing. Just spoke with a couple of rich Jew owners who sell on Amazon and Ebay and they are having problems leasing / buying buildings. for expansion.”
Good.
I don’t want to get into a free trade vs protectionism debate.
However, the “what me worry” attitude about sending billion dollar industries overseas was disgusting & short sighted.
It is also counter productive to maintaining our status as a Great Power Nation.
Turning America into a woke, de-industrialized, organic tomato garden is a recipe for disaster.
WOW! Guess the house taxes are going UP!
60% loss of customer base....
I’m in a hybrid mode now (couple of days WFH and a couple in the office) since there are systems I can’t access remotely and meetings/conversations that definitely CANNOT happen over the internet, no matter how encrypted.
It’s got its upsides and downsides but in the balance it has been good for me. Just depends on what you’re doing.
True. I’m outside the city limits. Even the north San Fernando Valley is double what I am paying. Downtown (or anywhere in the LA basin) is probably 50% more than that.
Your industry has taken what seems like a million sq feet off the market. Triscenic has their name on every third building around here. When I heard about a slowdown in production I was momentarily happy. Of course, I hope you personally plow on ahead.
New York City’s entire office market is valued at about $110 billion, so a $453 billion loss nationwide is actually staggering.
Even home deliveries of products has been heavily impacted. Amazon just said it is closing or stopping construction of FORTY FOUR warehouses!
If that is the case, that is a staggering number. I will concur with that.
I just thought the totality of the US real estate market would be measured in the trillions.
At some point, liberals who pay attention to how stuff works will get a real education in how everything is connected. Yeah, I know; a small minority, but it will provide educational assistance to that minority.
How many offices are empty due to the Democrat riots of 2020? How many of those offices are in places that are never coming back such as downtown Charlottesville, Los Angeles, Portland, Seattle, and San Francisco? The mayor of New York City, Kaiser Wilhelm Deblasio, led those rioters as well. Those places weren't killed by remote work, they were killed by Democrats determined to force Red states to bail them out.
What about downtown Minneapolis? What company could possibly have an office there knowing that the Democrat government will again promote riots for the next Saint of Fentanyl?
How many companies won't sign a lease knowing they will likely have to relocate to a different state because of the Democrat Socialists?
How many of offices are out of financial reach due to Jao Bai-din and the Democrats' inflation?
Remote work is part of the equation but the Democrats will blame it all to cover their other policies. It was forced on companies to "flatten the curve". That outright lie ended up continuing through now and some companies terminated their leases as part of their permanent closure, not remote work.
Remember, this is commercial real estate … so it’s not like the housing market where you can get a 30-year mortgage and ride out a few declines along the way. Here’s a typical scenario in the NYC office market:
1. A major real estate player buys an office building in 2019 for $100 million.
2. A major commercial lender appraises the building at $100 million, based on it’s then-current lease revenue.
3. The lender allows a maximum loan-to-value ratio of 75%, so it extends a commercial loan to the buyer for $75 million on the property.
4. Within one year, disaster strikes in the form of COVID idiocy and general mismanagement by government and corporate leaders. The NYC office market is in shambles, and the office building that was worth $100 million in 2019 is now worth only $60 million today.
5. The commercial lender notifies the property owner that the $75 million (or close to it) loan balance now exceeds the value of the property, and the real estate player must now come up with a large cash payment just to keep the loan current.
6. Real Estate Player says: “I don’t have $15 million on hand right now. Can we renegotiate the loan terms?”
7. Commercial Lender says: “$15 million won’t be enough even if you pay it today. See Paragraph X of your loan agreement, which is the 75% maximum loan-to-value provision. That means you have to pay the loan down to $45 million, not $60 million, on the $60 million property. Please send us $30 million within the next 60 days.”
8. Real Estate Player: “Forget about it. I don’t have $15 million, let alone $30 million. Here are the keys to the building.”
9. Commercial Lender: “No worries. We will take the building that is now worth $60 million, and we will file a claim under our credit default insurance policy with Big Insurance Company cover the remaining $15 million.”
10. Big Insurance Company: “Good luck collecting on that insurance claim, Commercial Lender. We have $25 billion in insurance reserves but we are facing $100 billion in credit default claims. We filed for bankruptcy in the U.S. District Court in New York City yesterday.”
And that is how your 2022 financial crisis begins to unfold.
Watch what happens to urban commercial real estate prices if anyone, anywhere uses a nuclear weapon.
Rossmann Realty revisited: Were the NYC retail storefront landlords right?
https://www.youtube.com/watch?v=Fk5o6cbq_Qs&list=PLkVbIsAWN2lvV4KY2Ag7r52_StPjX7OAh&index=4
The U.S. real estate market IS worth trillions of dollars. Keep in mind that residential real estate comprises about half of it, though. The other half is divided among all kinds of property types — office space being just one of them.
They closed.
Major cities.
Then what does Joe Biden say to Big Insurance Company?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.