Posted on 03/14/2024 12:32:17 PM PDT by ChicagoConservative27
Remarks last week by Federal Reserve Chair Jerome Powell about a spate of coming bank failures related to the faltering commercial real estate sector have sent shockwaves through the financial world, leading some investors to run for cover and others to look for opportunities.
With the typical U.S. commercial lease ranging from three to five years, the clock is ticking for office and retail property owners and their creditors in the financial sector as remote work has taken off and prompted changes in urban land use.
Office vacancy rates have climbed sharply in the wake of the pandemic after falling steadily in the decade before, reaching a record 13.1 percent last year, according to data from the Treasury Department’s Financial Stability Oversight Council (FSOC), citing analytics firm CoStar.
“At the midpoint of the third quarter of 2023, the national office vacancy rate hit a record high of 13.2 percent, a full 370 basis points higher than at the end of 2019,” CoStar analyst Phil Mobley wrote in a third-quarter analysis.
(Excerpt) Read more at thehill.com ...
If Trump were President, how would that headline read ?
The bomb already is going off. Lenders are faced with suboptimal workouts because they know that if they foreclose on the real estate, they aren’t going to be able to sell it either. So we’ll go through a round of workouts with real estate operators who are of decent quality to try to reposition the real estate (probably office to multi-family). I’d be surprised if there is a significant wave of pure foreclosures.
"Trump indicted on 32 counts of fraud for claims that the economy was good"
TRUMP DESTROYS BUSINESS SECTOR..BANKRUPTCIES DESTROY AMERICA..TRUMP PLAYING GOLF INSTEAD OF HELPING....BIDEN TRYING TO HELP...CAN’T FIND THE DOOR TO GET OUT OF BASEMENT.....
They are trying to keep this precarious, financial boulder on the mountainside but their “Great Reset” is washing out the slope. Their only hope is to have it explode after the election but Americans know who actually caused this mess.
When the fund managers started pushing REITs onto their managed trust funds, I suspected something was up.
About 8 years ago some one tried to sell me a REIT made up of land rented to CVS and Walgreens for stores.
Having watched a few belly up I said no.
“About 8 years ago some one tried to sell me a REIT made up of land rented to CVS and Walgreens for stores. Having watched a few belly up I said no.”
boy, did you dodge a bullet! the overbuilding around here by Walgreens was completely insane, practically one on every block ...
That is the way it works. Banks hate to foreclose and hold real estate. Owners and banks will do all manner of restructure arrangements to eventually recover their principal, just like in 2008.
“ When the fund managers started pushing REITs onto their managed trust funds, I suspected something was up.”
My REITs are still doing OK, mostly because rental housing makes up a big chunk and most of the rest is suburban and exurban commercial properties, but it’s about time to get rid of them. The Dims are making noise about rent control, restrictive zoning, and increased taxes, on both property and products, so maybe a less risky investment is in order.
The Covid lockdowns accelerated what should have been happening anyway—end to totally wasteful commuting to big city office buildings in an age where a significant portion of office work could be done at home.
The rising interest rates have made refinancing very difficult—and as loans expire the interest cost is about to explode on new loans.
These big office buildings are dinosaurs in the computer age—as is most of the downtowns they are in....
Computers have changed everything—cities have not adjusted.
With Democratic leadership these cities are on the fast track to the dustbin of history—like the old western mining ghost towns.
I did. Watching cities slowly deteriorate over the last 50 years made me very wary.
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