Free Republic

Lightning strikes TWICE! One year after regional banks crashed and burned due to the combination of tumbling debt/treasury prices coupled with cratering commercial real estate loans, fears about the current state of Commercial Real Estate – where most offices still see tenants at best 3 to 4 days a week and are literally burning through rents – appear long forgotten. Is that sensible? For one answer, we turned to the latest report from Goldman’s REIT/CRE expert Chandhi Luthra who has published a visual assessment of the state of CRE in 2024 in terms of loan maturities, 2023 extensions, and property...

The Biden administration is being ridiculed for hypocrisy as it touts 'energy savings' at federal buildings that are nearly empty of workers - and wasting billions of taxpayer dollars. Energy Sec. Jennifer Granholm recently celebrated the Biden administration's efforts to reach net-zero emissions from federal buildings by establishing a rule outlawing the use of fossil fuels on-site. 'The Biden-Harris Administration is practicing what we preach,' Granholm said in a statement about the rule. 'Just as we are helping households and businesses across the nation save money by saving energy, we are doing the same in our own federal buildings.' But...

The Biden administration is being ridiculed for hypocrisy as it touts 'energy savings' at federal buildings that are nearly empty of workers - and wasting billions of taxpayer dollars. Energy Sec. Jennifer Granholm recently celebrated the Biden administration's efforts to reach net-zero emissions from federal buildings by establishing a rule outlawing the use of fossil fuels on-site. 'The Biden-Harris Administration is practicing what we preach,' Granholm said in a statement about the rule. 'Just as we are helping households and businesses across the nation save money by saving energy, we are doing the same in our own federal buildings.' But...

S&P Global Ratings announced yesterday that it was changing its outlook on San Francisco's debt from stable to negative.The outlook on the city-county’s outstanding general obligation and appropriation debt was cut to negative from stable this week by the ratings company. The weakness in the city’s commercial real estate market and tourism activity were factors that drove the move, S&P said. Adding to the city’s burdens, San Francisco’s budget expenditures outpaced revenue growth in fiscal 2023.To be clear, the ratings agency hasn't downgraded the city's credit rating, which is still at "AAA," the highest possible. A downgrade in the credit...

Bidenomics is also a Highway To Hell for commercial real estate. Let’s say real estate is thunderstruck under Bidenomics. There are more dormant office towers in the United States than at any point since 1979, according to a new report from Moody’s Analytics, which began tracking office leasing vacancies that year. The rising supply of office space is due to a combination of surging remote and hybrid work that forces companies to reduce corporate footprints. Also, companies are exiting imploding progressive cities and high-taxed blue states for red ones while downsizing space. In the report, office tower vacancies rose to...

A Department of Transportation component slammed the brakes following semi-furious opposition to its proposal for "on demand" law enforcement surveillance of commercial vehicles a year and a half ago. It took another six months to turn over the records after a FOIA lawsuit to compel their release, a day before they were due in court Thursday, with no indication yet from FMCSA when it would release a final rule. The Federal Motor Carrier Safety Administration had internal conversations about those public comments over several months, including via personal email, at the same time it was stalling a Freedom of Information...

The Meltdown of Commercial Real EstateIn case you’ve still got money in a bank, Bloomberg is warning that defaults in commercial real estate loans could “topple” hundreds of US banks.Leaving taxpayers on the hook for trillions in losses.The note, by Senior Editor James Crombie, walks us through the festering hellscape that is commercial real estate.To set the mood, a new study predicts that nearly half of downtown Pittsburgh office space could be vacant in 4 years. Major cities like San Francisco are already sporting zombie-apocalypse downtowns, with abandoned office buildings baking in the sun.So what happened? The Fed’s yo-yo interest...

Across the country, deals are starting to pick up, revealing just how far real estate prices have fallen. That’s spurring widespread concern about losses that can ripple across the global financial system — as underscored by the recent turmoil unleashed by New York Community Bancorp, Japan’s Aozora Bank and Germany’s Deutsche Pfandbriefbank as they took steps to brace for bad loans. In Manhattan, brokers have started to market debt backed by a Blackstone-owned office building at a roughly 50% discount. A prime office tower in Los Angeles sold in December for about 45% less than its purchase price a decade...

Remarks last week by Federal Reserve Chair Jerome Powell about a spate of coming bank failures related to the faltering commercial real estate sector have sent shockwaves through the financial world, leading some investors to run for cover and others to look for opportunities. With the typical U.S. commercial lease ranging from three to five years, the clock is ticking for office and retail property owners and their creditors in the financial sector as remote work has taken off and prompted changes in urban land use. Office vacancy rates have climbed sharply in the wake of the pandemic after falling...

Holders of commercial real estate (CRE) debt are riding the tiger. Meaning that if interest rates don’t come down, there will be a lot of pain and suffering. “We’re far from neutral now,” said America’s Fed Chairman, Jerome Powell, to the Senate Banking Committee. As The Fed moves closer to cutting rates. All those rent-seekers stacked up with commercial real estate holdings nodded in violent agreement. That of course includes the nation’s regional banks, which continue to succumb to the power of their systemically important rivals, now so big that they cannot possibly be allowed to fail. Sometimes neutral rates...

New York Community Bancorp sent its shares plummeting 26% on Friday after the regional lender said has discovered “material weaknesses” in the ways it tracks loan risks and that its CEO is leaving. The New York-based firm announced late Thursday that CEO Thomas Cangemi would be leaving NYCB — capping off a 27-year tenure at NYCB — and that Alessandro DiNello would take his place, effective immediately. DiNello, NYCB’s executive chairman, had been acting as the bank’s true boss since earlier this month ... One NYCB director, Hanif “Wally” Dahya, said in a Feb. 25 letter that he “did not...

The latest hot spots in commercial real estate aren’t in Manhattan or Miami. Instead of snazzy hotels or glistening office towers, the new property darlings are power-hungry data centers, often in places like Northern Virginia; Columbus, Ohio; and Salt Lake City. Traditionally box style, these buildings are all about function: A place for racks and racks of computers to be stacked up high, kept cool, and girded for the boundless stream of images, videos, chats, text, internet searches and the digital detritus of our lives. Their goal isn’t merely to contain, host and sort data billowing from computers and smart...

The last time that commercial foreclosures were this high was in May 2015, per agency data.. Commercial real estate foreclosures in the U.S. increased 97% in January 2024 compared to last year, reaching a high that has not been seen in nearly a decade, according to new data. With 635 commercial foreclosures in January 2024, foreclosures increased 17% from December 2023 and 97% from January 2023, according to a report last week from property data analyst ATTOM. The last time that commercial foreclosures were this high was in May 2015, per agency data. "This uptick signifies not just a return...

A US non-profit that aired two ads during yesterday's Super Bowl attempting to rebrand Jesus for Gen Z is also the main funder of a designated hate group opposing abortion and LGBTIQ rights, openDemocracy can reveal. The Servant Foundation has plunged millions of dollars into its ‘He Gets Us’ ads, which paint Jesus as an “influencer” who was “cancelled” for standing up for his beliefs. The controversial adverts were shown at the Super Bowl for the second year running and have been plastered across billboards in the United States over the last year.

Twenty percent ($929 billion) of the $4.7 trillion of outstanding commercial mortgages held by lenders and investors will mature in 2024, a 28 percent increase from the $729 billion that matured in 2023 ... “The lack of transactions and other activity last year, coupled with built-in extension options and lender and servicer flexibility, has meant that many loans that were set to mature in 2023 have been extended or otherwise modified and will now mature in 2024, 2026, 2028 or in other coming years,” said Jamie Woodwell, Head of Commercial Real Estate Research at MBA. “These extensions and modifications have...

The developer that knocked down a landmark hotel opposite Madison Square Garden may build a temporary recreational space that could include tennis and basketball courts after scrapping plans for a shiny new skyscraper — a sign of the “office apocalypse” in the commercial real estate market. Vornado Realty Trust had initially planned to build a 56-story, 2.7 million-square-foot office tower on the site where the Hotel Pennsylvania once stood at 15 Penn Plaza. The century-old building in the Central Business District (CBD) near Penn Station was demolished last year. However, demand for commercial office space has been slow to recover...

In the ever-evolving landscape of financial markets, a red flag is waving high as market concentration risk reaches an unprecedented peak. The Top 10 stocks in the Russell 1000 now hold a staggering 31.3% of the index, marking a historic high and raising questions about the sustainability of the current market euphoria. The earnings gap between Mega Cap Tech Stocks and Small Caps has widened to an all-time high, creating a stark dichotomy in the performance of different segments of the market. As history unfolds, it’s vital to pay heed to the lessons of the past, where the most significant...

Rising interest rates, the remote work trend, and the dominance of e-commerce sellers have combined to hammer the commercial real estate market over the past few years. Sky-high office and retail space vacancies are plaguing owners in this new environment, rents are plummeting, and borrowing costs have soared. As a result, U.S. commercial real estate prices have fallen 11% since the Federal Reserve began raising interest rates in March 2022, the IMF reported last week, the worst decline in over 50 years. The outlook for the sector is now so bleak that Cantor Fitzgerald’s billionaire chairman and CEO Howard Lutnick...

World's biggest private equity fund takes a $450million hit on prestigious New York landmark amid a collapse in the commercial property market Comes as landlords across the country write down their portfolios in the wake of high interest rates and an exodus of office workers The price of office space has fallen 35 percent since 2022 leaving US banks vulnerable to billions of dollars in shaky loans The world's biggest private equity fund has become the latest victim of America's hollowed out office culture after it marketed its landmark New York building for a quarter of what it paid. Blackstone...

Accounting firm KPMG is set to move out of its $400 million namesake building, another high-profile exit from San Francisco's beleaguered downtown. The consulting and accounting giant first leased space in the 25-story office tower when the building opened in 2002. Its name hangs above the entry to the skyscraper where the company currently occupies more than 100,000 square feet. It comes as shoe store Alto prepares to exit San Francisco Centre, the city's biggest mall, next week. Businesses and residents have fled downtown San Francisco since the pandemic with groups blaming crime, homelessness and work-from-home keeping people from downtown....