Posted on 07/29/2023 5:15:59 AM PDT by Kaiser8408a
I keep saying that CRE is going to crash, but the days keep ticking along…
Fighting fire with fire, makes sense (sometimes).
But, fighting inflation by raising prices does not make sense in the current economic quagmire.
Only yesterday, SFGate was busy with telling us that there was a ten percent uptick from the bottom.... Because “a study” or something....
I don’t see how commercial office space doesn’t completely crash post-Covid. People demand to work from home, companies have figured out how to accommodate it. There are exceptions, but overall there will be much less need for office CRE.
Same. I’m remote and never going back. I don’t understand how it’s still not crashing.
SF where the Millennium Tower is leaning, Park hotels isn’t paying its $750 million loan, and the biggest mall is also not paying its $500 million loan.
This is without all the crime and poop.
Oh yeah, Twitter isn’t paying their loan either.
And that's a short list.
And yet nothing, I don’t get it…
I’ve got some passing familiarity with how corporate office RE works. I’d say a big regional office with say 120,000SF of space will need less than half that post-Covid. 2/3rds on the upper end. There may be businesses needed the full 120kSF, but there will be those who need less than 30k. I am amazed we haven’t seen more give backs to the banks like with the San Francisco Union Square hotels and the SF in-town retail mall. There are other considerations besides post-Covid realities in SF, but the underlying issues are still there.
And you’re already ahead of me on the SF stuff. We’re very much on the same page here.
So you are of the thinking that there should be some correction, whether reasonable or massive?
Also recall that several weeks ago London Breed basically accused Joe Biden of "not doing enough."
It is of course a horrid fiscal problem arising in slow motion, but it is also a fascinating political problem arising likety-split.
Black, female Democrat mayor, with a Democrat board of supervisors in a Democrat-controlled super-majority in the state legislature, and two Democrat senators. Which Republican are they going to find to blame for the woes of the city? Ain't one to be found.
What's to be found? Celebrations of leather BDSM and nudity on the filthy streets. Emptying small business locales. Often unused convention facilities and all that goes with them.
The crunch is evident, and the crisis now very near. I loved that city, once upon a time. I won't live long enough to WANT to see it again. Multiply "people walk away" for reasons of all the Democrat policies aggravated by the fake but very hysterical Covid panic, the BART mess, and.... Tick tock.
Oh, heck yes. I just hope it doesn’t take the banking system down again, like residential real estate did in 2008.
I’ve always had prepper tendencies, and some actual preps, but current events (which go beyond this issue alone) have me going full bore.
Anthony Sanders is accentuating the negative, ignoring the positive again. I feel as though the implications of this hack’s news stories is always bearish, and yet the economy is on a 3.5% pace this qtr, and the stock market is up day after day after day. He never mentions those things. He may not be an impartial observer of reality. Instead he may be selecting specific news stories to create a misleading impression of general economic gloom.
I think residential real estate is a bubble as well. I don’t know if true, or how significant, but REITs and other financial firms were buying many homes at or above asking price.
Zillow has this house up almost 25% from when I bought it two years ago. Now, there are some decent reasons for at least some of that, but I still think it’s absurd. That said, the amount of inflation caused by all the Covid money printing is having a huge effect on hard assets. And there are some location factors working in my favor.
Who knows? 🤷♂️
We live in interesting times.
Oh, and while it has dropped off, for a while there we were getting constant calls and texts wanting to buy our residential real estate assets.
“Would you be interested in selling your house at XYZ Address?”
That sort of thing.
To speak to your last comment. And it has dropped off considerably, for a while there we would get 1-3 a week, week in, week out. It became a bit of a joke between me and the wife. “Just got another one, this time for the ABC house.”
The everything bubble will pop we just don’t know when. Then the government will be last pop. It will be interesting.
I guess we can take solace in the fact our “lives” will wind up in textbooks.
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