patrick.net

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.

https://finance.yahoo.com/news/home-dying-nyc-offices-nearly-120015393.html

'Work From Home Is Dying' – NYC Offices Nearly Full As Workers Return In Droves

https://finance.yahoo.com/news/home-dying-nyc-offices-nearly-120015393.html

'Work From Home Is Dying' – NYC Offices Nearly Full As Workers Return In Droves

zzyzzx says

https://finance.yahoo.com/news/home-dying-nyc-offices-nearly-120015393.html

'Work From Home Is Dying' – NYC Offices Nearly Full As Workers Return In Droves

My work from home.

Blackstone sees value of Charles Schwab's former San Francisco headquarters at 211 Main fall by nearly half - San Francisco Business Times

Appraisers slashed the value of 211 Main St. by roughly half at the end of October, suggesting the building is today worth less than the debt Blackstone Inc. used to acquire it almost eight years ago.

The 17-story, 417,226-square-foot 211 Main was appraised at $152 million, or $364 per square foot, in October, according to CMBS data released this month. That is down from $294 million, or around $705 per square foot, when Blackstone (NYSE: BX) acquired the property in March 2017. The Manhattan-based investor took out a $195.2 million loan to support its acquisition of the building, which was then fully leased to brokerage Charles Schwab Corp. as its corporate headquarters.

The October appraisal comes a few months after Schwab, which relocated its headquarters from San Francisco to Westlake, Texas in 2019, officially put close to 230,000 square feet in the building up for sublease, shrinking its footprint there to six floors.

Lol! I worked in that building for about four years at Schwab. Schwab's a good company, but I'm happy to see Blackstone take a hit.

California’s controlled demolition continues, signaling why the fledgling Democrat Resistance is already doomed. Local KTLA ran a story yesterday headlined, “Downtown Los Angeles skyscraper loses 2/3 of value.” Last appraised ten years ago at $605 million, the Bank of America Plaza in downtown LA just appraised at only $188 million — having lost 66% of its value in ten years. It has defaulted on its loans. The building’s occupancy is terrible. What could have caused this? Hint:




This type of depressing headline is common for the Big Blue Cities. Still, Democrats will deny, they’ll try to wave away the Blue commercial market meltdown, blaming it on pandemic fatigue and worker’s changing preferences for spending their days working in pajamas instead of coming into the office.

But that is a lie. To prove it, I rounded up two more headlines to make a trifecta.

First, compare the real estate market in Los Angeles, California with the market in Miami, Florida. In July, the Financial Times ran a story headlined, “Cost of Miami office space hits record high. In the very first paragraph, FT provided readers with what I like to call a “clue:”

The cost of Miami office space hit a new record as demand from
blue-chip companies from New York, Chicago and Los Angeles for
high-end offices outstrips supply.

Apparently, for some reason, unlike Los Angeles, Miami’s commercial market has not been hollowed out by work-from-home policies. It is not suffering from pandemic fatigue. It is booming. And it is stealing LA’s blue-chip companies.

But, Democrats will wail, that’s just because it’s Florida, and Florida is an outlier. But pardonne-moi, mon ami. Not so fast. Let’s consider the next best red market or, tipping the cowboy hat as deserved, arguably the best.

Early this month, just a few weeks ago, Dallas Magazine ran a story headlined, “Dallas Named Country's No. 1 Commercial Real Estate Market for 2025. Here's Why.” Not only did this delightful story prove that a second Big Red City is also not suffering pandemic fatigue or having any pajama problems, but it helpfully provided the current list of the top ten commercial real estate markets. Ready? See if you can spot any common characteristics:

DFW has consistently been in the top 10 for six years, but this marks its
return to the top spot for the first time since 2019.
Miami ranked No. 2, followed by Houston, Tampa-St. Petersburg,
Nashville, Orlando, Atlanta, Boston, Salt Lake City, and Phoenix.

You see it. Except for Boston, all the top-performing real estate markets are all Red State Big Cities.

The commercial market metric is only one of many, although it is one of the clearest metrics and one of the most shocking. But when we look at other figures, we find similar trends. For example, consider this PEW Charitable Trust chart of states and their net migration changes:




See? The Red States win. Each new Red State citizen is a new taxpayer and a new contributor to the economy. And each one who’s moved means one fewer taxpayer and economic contributor from the Blue states of origin. The list of net loser states is a Blue wall of shame.

See? The Red States win. Each new Red State citizen is a new taxpayer and a new contributor to the economy. And each one who’s moved means one fewer taxpayer and economic contributor from the Blue states of origin. The list of net loser states is a Blue wall of shame.

— In April, Orion, a 241-unit apartment complex in the Brooklyn Basin area of the Oakland waterfront, was taken back by its lender, UBS Realty Investors.

A 206-unit, 24-story housing tower at 1700 Webster St. in downtown Oakland was taken back on Aug. 28, 2024, by its lender due to a delinquent $90 million loan.

Not just by Somalians and not just in Minneapolis

Berkeley apartment complex is foreclosed at sharply discounted value
Apartment values remain feeble in East Bay
BERKELEY — A Berkeley apartment complex that’s a short distance from the UC campus has been foreclosed at a sharply discounted price compared with its prior value.

The University Park residential hub at 1709 Shattuck Ave. went through a foreclosure proceeding on Jan. 22 that placed a $25 million value on the property, according to documents posted for this week’s trustee’s sale of the site...

The foreclosure proceeding forced Academy West Investments to lose its ownership of the property, which the real estate firm had bought in 2020 for $34 million.

Academy West was losing money each month for at least a one-year period that ended in September 2025, court papers showed.

During that time, Academy West managed to generate roughly $147,600 a month from rent collections...

Academy West was also betting on the long-term trend of housing supply constraints in the area.

“We are excited,” Muro said, that upgrades to the units would help University Park “command premium rents considering the demand for luxury housing within this highly desirable market.”

My wife is half Armenian, and when I mentioned that Trump is now denying visas to Armenians, she said that that was understandable, because the eastern Armenians who lived under the Soviets are definitely into a lot of fraud.

Yeah, this has been going on by LA Armenians for DECADES!

IRS has a special desk for Ex-Soviet Armenians. Amazing they still get away with it. But remember, they also learned how to bribe Soviet officials…

Back in the day in Los Angeles there was a prevalence of "Cell Phone Accessory" stores. Sometimes several per block.

We'd film on these dumpy commercial streets, and be working in front of these shops for days. But we wouldn't see a single customer enter or exit.

The off duty cops we hired for traffic control explained that it's all money laundering. Same with the bodegas, the vape shops, and most of the restaurants.

In Los Angeles, and many other cities, there are miles and miles of streets full of businesses with no customers. And yes, most of them are owned by immigrants.

Another story, this time from San Francisco...

A new asian hotdog place opened in my neighborhood. It looked cute from the outside. Thought it might have good food (sometimes these places do). So I went in and ordered a hotdog....

The cute asian girl disappeared into the kitchen. Doesn't come out for a long time. After 15 minutes I walk to the counter and ask "how's it going in there?" but I got no answer.

So I peeked into the "kitchen". And to my surprise there was no kitchen--it was just an empty room. No fridge, no stove, no food.

And there was no cute asian girl.

She'd left.

She had my money so I stuck around to see what the fuck was going on. A few minutes later she returned with a hotdog. I have no idea where she got it from. (I asked but she pretended not to understand English👍)

So this raises some questions, because in San Francisco the health department "grade" must be placed in the window of the restaurant. And the fake hotdog place had a legit 99% rating (probably because they had no food on the premises).

So somebody from the city of San Francisco inspected, and passed, a fake restaurant. The inspectors were probably on the take. At best, they looked the other way.

These "shops" take up a lot of retail space--it's a lot of real estate. And retail space--especially in San Francisco and Los Angeles--is expensive, mainly because the cheap space is taken up with fake businesses.

In the past I've looked into opening retail businesses. The biggest expense is rent. And it's so expensive that I abandoned the business ideas after running the numbers.

So how much of the commercial real estate market is propped up by these sham businesses?

And how many honest entrepreneurial Americans could be running their own small businesses but aren't doing so because the rent is too damn high?

Once you start looking for fake businesses you can't stop seeing them.

So the next time you're driving around your city, look at the dumpy commercial strips, and the dirty "store" windows. Then look at the crappy strip malls with peeling paint, cracked signs, and empty potholed parking lots.

Then ask yourself, "How much of this is fake?"

Commercial MBS worse than the GFR now.


https://wolfstreet.com/2026/02/03/office-cmbs-delinquency-rate-spikes-to-record-12-3-much-worse-than-financial-crisis-meltdown-peak/