Commercial Real Estate Crisis: 98+% Off the Old Price…and Rising?

The Latest from Seton Motley | Less Government |
The Latest from Seton Motley | Less Government |
More Good News to Follow….

Big Banks destroying the global economy – has happened before.  Quite recently, actually….

Banking Collapse of 2008: Three Weeks That Changed the World

Except, of course, nothing that actually matters changed.

Big Government has continued to be stupid.  Because that’s unavoidable.

Death Spiral: Gov’s Inflation-Interest Rate Hike Whipsaw

Big Government has also, of course, continued its Big Cronyism – including for the Big Banks.

Which means what’s past – is prologue….

‘Too Big To Fail’ Banks – Are About to Fail Again

2008 Big Bank Bailout? $16.8 Trillion. This Time? MUCH Worse

Big Government’s cronyism – is a HUGE contributing factor to the looming collapse….

Dodd-Frank Is Making Big Banks Bigger, Crippling Small Banks

Big Biz Crushing The Little Guy – Is DC’s ‘Reform’

Small Lenders Beg DC to Not Accelerate DC’s Executing Them

Big Banks Charge Ridiculous Loan Rates – Big Gov Isn’t Looking to Murder Them

DC Looks to Price Cap Big Banks’ Tiny Competitors – Not Big Banks

Why Is ‘Too Big to Fail’ DC – Mega-Targeting Tiny Payday Lenders?

DC Seizes First Republic Bank – Flips It to Crony JP Morgan

Big Media is also in on the Big Crony scam….

Big Media Yet Again Doing PR Work for Big Banks and Big Government

‘Too Big to Fail’ – to ‘We Only Need 3 or 4 Banks’ – in 13 Years

Bloomberg Finally Realizes Reality: ‘Commercial Real Estate’s “Warning Stage”‘

There it is.  I have long been saying that it is the commercial real estate – not residential – that will collapse first this go round.

Not just in the US – but all around the world.

Because the global government lockdowns – allegedly because of the China Virus – made billions of people realize they don’t have to work in an office.

The Next Crisis Will Start With Empty Office Buildings

Commercial Real Estate in Crisis: Evidence from Transaction-Level Data

Why a Crisis Is Looming in Commercial Real Estate

Commercial Real Estate’s Slow-Motion Crisis Explaine

We know why.  No need to explain it to us.

And we know why it’s everywhere….

Crisis Radar Falls on Fault Lines in Europe’s Commercial Property

Commercial Property: The German Real Estate Crisis Claims Its First Big Victims

UK Commercial Real Estate Entering Downturn

China Commercial Property Woes Trigger Surge in Distressed Sales

Korea Commercial Real Estate Crash Punishes Investors

And the crisis is, of course, looming in the United States.

Which, when it goes, will be the first domino – that knocks down all the rest.

When the US gets a cold – the planet sneezes….

U.S. Commercial Real Estate Is in Big Trouble:

“Problems for the US commercial real estate sector seem to be getting worse – and spreading.”

The U.S. Banks With the Most Commercial Real Estate Exposure

These loans – are paying off less and less.…

How Large Will Losses Be in Commercial Real Estate?

We’re fixing to find out.  This from last year….

Fire-Sale Pricing Comes to Office Investment Sales:

“Listings of office buildings for sale are…rising. ‘Office inventory is growing,’ Steven Jacobs, president of online auction platform Ten-X, told the WSJ. ‘Investors want out.’…

“Commercial real estate owners are starting to unload troubled office buildings at fire-sale prices, in what the Wall Street Journal reported as a sign that the office market slump is moving into a new phase where more landlords are ready to capitulate.

“In recent weeks, Blackstone sold the Griffin Towers office complex in Santa Ana for $82 million, or about 36% less than it paid in 2014, people familiar with the matter told the WSJ.

“Principal Financial Group sold a Parsippany, NJ office building for $14.3 million, down from the $52 million it paid in 2008.

“The tower at 350 California in San Francisco, valued at $300 million in 2019, is expected to trade at about $60 million, or roughly 80% below that previous valuation.”

You think 80% down is bad?  Just last week – we hit 98+%….

One of St. Louis’ Tallest Office Towers, Empty for Years, Sells for Less Than 2% of Its Peak Price:

“In the latest sign of how lower demand is hitting parts of the U.S. office market, one of the tallest towers in St. Louis that sold for $205 million in 2006 has changed hands again this week – for about $3.6 million….

“On a per-square-foot basis, the tower’s value over 18 years dropped from about $140 to $2.50.”

Could things get even worse?  How could they not?….

America’s Office Fire Sale Has Barely Begun:

“(T)he U.S. vacancy rate has risen from 11% in late 2019 to 17% today, higher than at any point in the 2008 global financial crisis….

“Of the $35.8 billion of office loans that came due in the commercial mortgage-backed securities market last year, only a quarter were paid off in full….

“Distressed-debt investors might slow the pace of forced sales in a handful of cases, but the office sector’s need for finance will soon massively outstrip supply.

“CBRE thinks U.S. office landlords face a $72.7 billion refinancing shortfall between now and the end of 2025.

“The lack of distressed sales might also be a sign of wishful thinking. Some borrowers and their lenders are likely holding out for lower interest rates: Cheaper debt might limit the price cuts they need to accept when they sell.

“There are also hopes that some office demand might come back. It wasn’t long ago that remote work was considered a fad: The value of offices bought in 2021 was the second-highest since 2008, based on MSCI Real Assets data.

“There are costs to holding out, though. It is expensive to insure and maintain offices that could end up obsolete.

“And when a flood of distressed assets does eventually hit the market, it will put further pressure on office values that have already fallen 35%.”

So “wishful thinking” is all that stands between us – and global cataclysm.

And “wishful thinking” – almost always works out well.  Right…?