The coming collapse of commercial real estate
invite response
2023 Jun 26, 5:29pm 404 views 4 comments
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1
DemocratsAreTotallyFucked
2023 Jun 26, 6:50pm
DemocratsAreTotallyFucked
2023 Jun 26, 6:50pm
Cities impacted will have to engage in some aggressive rezoning and redevelopment incentives to convert these buildings into apartments and condos/coops pronto. And do it fast.
With a few exceptions, they won't. Just like they haven't for all the abandoned malls out there.
With a few exceptions, they won't. Just like they haven't for all the abandoned malls out there.
2
Patrick
2024 Aug 2, 11:48am
Patrick
2024 Aug 2, 11:48am
https://www.coffeeandcovid.com/p/its-complicated-friday-august-2-2024
The controlled demolition of downtown New York City continues. Yesterday, the New York Times ran a sobering real-estate story headlined, “This 23-Floor Manhattan Office Building Just Sold at a 97.5% Discount.” Apparently, inflation hit everything else but missed big-city commercial real estate. The building in the story, which used to headquarter Sports Illustrated, last sold in 2006 —admittedly at peak market— for $332 million dollars. On Wednesday, it sold at auction for only $8 million, a stunning 98% discount.
The sellers accepted such a low price because 135 West 50th Street is two-thirds empty, and the rents from the remaining tenants aren’t even enough to cover the ground lease, which the building’s owner must pay to a different party that owns the underlying land. So when you add up the ground lease, the taxes, upkeep, and financing costs, 135 West 50th is losing money faster than a Boeing Starliner with a helium leak.
The Times grimly noted that New York’s real estate market has yet to hit bottom. It’s still falling from orbit, somewhere over Nebraska.
The City is also a big loser. Property taxes on an $8 million building are 98% less than taxes on a $332 million building. But the good news is that capitalism and free markets, if allowed to function, could easily cure this problem. A new owner with a much smaller mortgage would have the flexibility to find the building’s highest and best use.
3
AD
2024 Aug 19, 3:01pm
AD
2024 Aug 19, 3:01pm
Frank Lloyd Wright's high risk (called Price Tower) in northern Oklahoma
"The tower was sold in 2023 for $10 to Copper Tree Inc., which had planned to restore the building. By August 2024, the owners owed more than $2 million and were selling off the tower's furniture. As a result, the tower is closed effective September 1, 2024, amid financial issues and a dispute with the Frank Lloyd Wright Building Conservancy regarding the sale of the furniture"
"The tower was sold in 2023 for $10 to Copper Tree Inc., which had planned to restore the building. By August 2024, the owners owed more than $2 million and were selling off the tower's furniture. As a result, the tower is closed effective September 1, 2024, amid financial issues and a dispute with the Frank Lloyd Wright Building Conservancy regarding the sale of the furniture"
4
FortwayeAsFuckJoeBiden
2024 Aug 19, 8:00pm
they’ll bail it out. guys, the people with big money always get rescued. it’s you and i they look at with disdain.
Excerpted from the article by Andrea Widburg The American Thinker
... commercial real estate is empty. Small businesses don’t renew their leases, and large businesses simply forfeit them. Building owners are walking away from mortgages, leaving their empty office towers to the banks, which cannot possibly find tenants for them. The result is that we are looking at a coming commercial real estate collapse that could make 2008’s home real estate recession look like a cheery block party:
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.
According to building security company Kastle Systems, only about half of office workers in the Big Apple are back at their desks.
And a joint study from researchers at New York University and Columbia University found that offices in the city will lose 44 percent of their pre-pandemic value by 2029 because of the impact of remote work.
Across the country, values for offices have decreased by 27 percent since March 2022, according to data analytics company Green Street.
In 2008, with the home real estate collapse, the American economy still had some resilience. This time around, it does not, and the damage done to the financial system, when it starts radiating out to the employment sector, could be devastating. I have no advice whatsoever for how to weather the coming storm. It’s like watching a massive tornado heading your way and knowing that your storm cellar has already flooded. There’s no way out.
For the full article: https://www.americanthinker.com/blog/2023/06/the_coming_collapse_of_commercial_real_estate.html