I can help out here. The BOTTOM is when office space is cheap enough for developers to buy and convert to living quarters...and this price is based, in part, tied to the conditions of where the office is located. If located in “The City”, then the sales/rental price will be far lower than the suburbs, as the yuppies will not be nearly as willing to live there, as they were only several years ago, when violent felons were considered people that should be removed from society.
Not much. The CRE situation is just one facet of the looming apocalypse:
https://market-ticker.org/akcs-www?post=249340
Nobody does rant like Denninger, but he's usually right.
Let them crash.
They knew the risks.
The largest banks, about which the Fed is concerned, probably will have less exposure to city-specific commercial real-estate. And if they do, the Fed will make sure there’s a dozen programs available to bail them out.
The same can not be said for local or medium size banks.
If one of them gets into trouble, the Federal Reserve will be there to help them buy up the assets for pennies on the dollar.
Just look at JP Morgan’s buy-out of First Republic. 80% of losses were guaranteed by Fed.gov (ironically, not the Federal Reserve)
It pays to be a member of America’s oligarchy.
Good question. At least with the housing crisis there were buyers available. With CRE, who knows? Maybe a use change coming up?
Why not put all the illegal aliens and “refugees” currently getting “free” housing from the Feds that is exploding home prices into these buildings?
The three essential rules of real estate haven’t died. Commercial spaces are still being built. They are just not being built where there is crime, homelessness, high taxes and poo on the sidewalks.
The FED is doing precisely what their charter says they should do.
They are responding to the war on fossil fuel and American Recvery Act and Inflation Reduction Act. Those 3 actions of Biden caused this inflation. Biden is to blame, not the Fed.
Th Fed is just trying to minimize the damage from Biden’s actions. Blame Biden.
The FED is doing precisely what their charter says they should do.
They are responding to the war on fossil fuel and American Recvery Act and Inflation Reduction Act. Those 3 actions of Biden caused this inflation. Biden is to blame, not the Fed.
Th Fed is just trying to minimize the damage from Biden’s actions. Blame Biden.
Government will expand to fill the space available.
One more factor: huge writedowns of real estate will lead to reduced income tax liabilities for the companies involved.
It is fairly cheap to convert office space to very large apartments.
It is not cheap to convert office space to many small apartments.
Prime residential space might quite often go for around $300/square foot in a major city, but it can go for over three times that in some places.
SOHO industrial space was very affordable when converted to residential about six decades ago.
The traditional "city" and its urban office landscape is being swept away by unstoppable forces and it isn't coming back. It will be a series of collapses amid a constant backdrop of death by a thousand cuts.
More great news!