The collapse has been pronounced in the biggest cities with DC facing a 21.1 percent vacancy rate and San Francisco’s 34 percent.
It has led to a 35 percent fall in office prices from their peak in early 2022 and left banks vulnerable to billions of dollars in shaky loans.
About $117 billion worth is expected to be due this year and needs to be repaid or refinanced, according to the Mortgage Bankers Association.
Economists last month found 40 per cent of office loans on bank balance sheets were underwater - owing more than the property is worth.
Smaller regional banks who loaned the money to buy them could themselves be at risk if the loans default as they are not big enough to handle the losses.
Blackstone bought the 600,000-square-foot property between 55th and 56th streets from real-estate investment trust Vornado with a $308million mortgage and began a major re-fit of the historic building.
It stopped paying the mortgage in March 2022 and occupancy had fallen to an eye-watering 7.4 percent by September of last year.
‘How could one of the world’s biggest landlords quit on a relatively modest $308 million loan, after they spent a fortune on modernizing the building with a new lobby and restaurant?’ an insider demanded.
Ha....wonder how this compares to red state office building occupancy.
And....nice that these creeps get to just stop making payments, on a loan, for nearly TWO years, now.
Looks like a replay of Lehman Brothers collapse.
Those not familiar with the game, watch the movie Margin Call. THIS IS IT, for those with securities backed by those mortages.
“The collapse has been pronounced in the biggest cities with DC facing a 21.1 percent vacancy rate and San Francisco’s 34 percent.”
This will get much worse as leases expire and companies either quit their leased spaces and move to a greater reliance on remote work.
There’s also the major cities that will see companies depart for better locations.
All as those lease terms come up.