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As the shadows of economic uncertainty lengthen, the once-solid foundations of commercial real estate markets now tremble under the weight of impending crisis. With banks holding nearly 40% of all CRE debt, the tremors are felt far and wide, signaling a looming catastrophe that could spell disaster for financial institutions worldwide. The warning bells are ringing loud and clear, with UBS flagging the downturn in commercial real estate markets as one of the “top and emerging risks” facing the banking sector. The sharp decline in demand for office space, coupled with soaring borrowing costs, paints a bleak picture for an...

Federal Reserve Chair Jerome Powell said Thursday he expects to see some banks fail due to their exposure to the commercial real estate sector, which has declined significantly in value following the shift to remote work. Powell said the banks that are in trouble with falling office space and retail assets are not the big banks, which were designated as “systemically important” in the aftermath of the 2008 financial crisis. That episode, which resulted in a taxpayer bailout of the financial sector, was also triggered by unsound real estate assets. Rather, the banks at risk of failure now Powell identified...

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...

Commentary In the mid-1970s I was a struggling business and economics student. I paid for my tuition and personal expenses with physically demanding summer and part-time jobs and some student debt. I dreamed of one day working on Canada’s version of Wall Street, which was located in Toronto at the corner of King and Bay streets. That dream came true in the spring of 1980 when the Dominion Bond Rating Service hired me as a junior analyst. Four of the five big Canadian banks occupied the corners of King and Bay in their impressive skyscrapers. A block away were the...

New York, Boston, Providence, Philadelphia, and Washington D.C. are among the largest cities in the Northeast, with a plethora of towering office buildings populating their skylines. Ironically though, none of these locations are listed in the National Association of Realtors’ (NAR) Top 10 Commercial Office Markets for the third quarter of 2021. Instead, the South and West dominate the list, with places like Austin, Boise, Chattanooga, and Omaha, plus three different locations in Florida–Daytona Beach, Palm Beach, and Miami. Also absent from the register are metropolitan locations like Chicago, Los Angeles, San Francisco, Denver, and Seattle. NAR analyzed 390 commercial...

Analysis: Bubble concerns spread to China commercial property By Langi Chiang and Charlie Zhu BEIJING/HONG KONG | Tue Oct 11, 2011 12:49am EDT (Reuters) - Concerns about a bubble in China's residential property market is spreading to the commercial real estate sector at a time when developers are upping their exposure, and the country's insurance industry is poised to invest huge sums into the space. While commercial prices are steady and insurance companies are watching and waiting, residential property developers have increased investment into the office sector after Chinese government measures were instituted to cool home prices. Shimao Property (0813.HK),...

A mortgage crisis like the one that has devastated homeowners is enveloping the nation's office and retail buildings, and few places are likely to be hit as hard as Washington. The foreclosure wave is likely to swamp many smaller community banks across the country, and many well-known properties, including Washington's Mayflower Hotel and the Boulevard at the Capital Centre in Largo, are at risk, industry analysts say.

Simon Property Group Inc. has submitted a $10 billion bid to buy the bankrupt General Growth Properties Inc. Indianapolis-based Simon (NYSE: SPG) owns nearly 400 retail properties nationwide, including Ingram Park Mall and Rolling Oaks Mall in San Antonio. Chicago-based General Growth Properties (Pink Sheets: GGWPQ) owns North Star Mall and is an investor in The Shops at La Cantera in San Antonio. Under the terms of the offer, about $7 billion of the total bid would go toward General Growth’s creditors. Shareholders of General Growth would receive the balance of the funds — which equates to more than $9...

Desolate Malls, Empty Offices May Come Soon Report: Defaults on commercial real estate loans a looming economic crisis Feb. 11, 2010 WASHINGTON - Over the next several years, failed commercial real estate loans could litter American cities with empty stores and office complexes, cause hundreds of bank failures and weaken the economy, a watchdog report says. Banks face up to $300 billion in losses on loans made for commercial property and development, according to a report released Thursday by the Congressional Oversight Panel. The panel monitors the government's efforts to stabilize the financial system. The report says the defaults could...

Surges of large-scale retail bankruptcies such as Circuit City electronics and Mervyns department stores altered the shopping landscape in 2009 -- and experts say 2010 is likely to bring even more changes. Amid a still-tepid economic recovery, big retail chains are expected to continue closing their less productive stores and retrenching on expansion plans. But at the same time, others will be hurtling into the breach to take advantage of falling rents and vacancies in neighborhoods they couldn't get into a few years ago. "The prediction for next year is more re-sizing and relocating of retailers," said real estate broker...

THE next wave of the credit crisis is about to hit -- a collapse in com mercial real estate and potential explosion of bank failures. With its resources tapped out by the first wave, what should Washington do? Over the last year, the Federal Reserve doubled the size of its balance sheet, and took unprecedented action in monetizing government debt and extending credit to financial institutions. Now it must head off inflation and extricate itself from $5 trillion-plus in credit exposure from various bailouts. The Treasury, meanwhile, is issuing debt at the fastest pace in peacetime history. Now comes the...

Fed to launch program bolstering commercial loans in June Plan will provide five-year loans to revive business real estate market By Ronald D. Orol, MarketWatch Last update: 3:50 p.m. EDT May 1, 2009 WASHINGTON (MarketWatch) -- The Federal Reserve announced Friday it will take a key consumer-lending program and expanded it to help jump-start the commercial real-estate lending industry. The program, which will be launched in June, will provide government five-year loans to investors so they can buy commercial real estate securities. The goal is to revive lending in this market. The program is part of a larger Federal Reserve...

Commercial real estate sales plunge Silicon Valley / San Jose Business Journal - by Katherine Conrad Commercial real estate sales plummeted across the globe with transactions dropping in the first quarter more than 70 percent from the end of 2008, according to a report released this week by Real Capital Analytics. The New York-based firm said sales in the first three months of 2009 were just one-sixth of the number of buildings that traded two years ago. All told just over 1,000 buildings valued at $47 billion were sold in the first quarter of 2009. Another worrisome sign is the...

Virgin Megastore in S.F. will liquidate Victoria Colliver, Chronicle Staff Writer February 27, 2009 The Virgin Megastore in San Francisco will shut its doors in late April, adding a large vacancy at Stockton and Market streets to a growing number of empty storefronts around Union Square, the retail heart of the city. The music and video retailer, which opened its estimated 45,000-square-foot store 14 years ago, will start liquidation sales sometime next month, company officials confirmed Thursday. Union Square is still considered one of the country's most vibrant shopping districts and a destination for international tourists. But one of the...