The commercial real estate (CRE) sector is facing significant challenges, with around $1 trillion in debt coming due this year. Many companies are opting to reduce their office space by 30% to 40% as leases expire, signaling the start of what has been described as America's office fire sale. This trend is compounded by high vacancy rates in areas like Third Avenue and predictions that half of downtown Pittsburgh's office space could be empty within four years. Additionally, the end of the Bank Term Funding Program (BTFP) has raised concerns about regional banks, which hold a substantial portion of CRE loans on their balance sheets and are showing signs of distress, including increased credit card delinquency rates and $3.4 billion borrowed in the last week of the BTFP. Despite these challenges, investment firms like Blackstone and Goldman Sachs are gearing up to increase their investments in CRE, betting that the market has bottomed out. For instance, Hilton has recently sealed a $210M deal to expand into college towns. However, the sector's systemic threats and the potential for hundreds of bank failures due to CRE loan defaults have led some to question the optimism, with policymakers' assurances that the situation is 'manageable' being met with skepticism. Bruce Richards of Marathon Asset Management has highlighted the risk of hundreds of small regional bank failures if CRE defaults accelerate.
Commercial Real Estate CLOs Near Brink as Distressed Loans Surge @business #CMBS Delinquencies soar as rising rates dent property resale values CRE CLO market is ‘first shoe to drop,’ says Gentrust’s Neely https://t.co/4luIx8f3Je
Bank of America is cutting some office space in its headquarters in Hong Kong’s Central district, underscoring the headwinds for the city’s commercial landlords https://t.co/tHlFp6j9aV
The CEO of Marathon Asset Management, Bruce Richards, says hundreds of small regional banks could fail if commercial real estate defaults accelerate. According to the Mortgage Bankers Association, $929B in commercial mortgages...20% of the $4.7T total held by lenders and… https://t.co/zDAbXpm78Y
Although down from 2022 highs, dry powder is still near all-time highs and is ready to be deployed. Companies like Blackstone and Goldman have recently announced resumption of "active investing" in CRE this year. https://t.co/orQqKd2ps9
Half Of Downtown Pittsburgh Office Space Could Be Empty In 4 Years #CMBS https://t.co/fN2JvJ45Ss
Commercial Real Estate’s Systemic Threat: Separating Fact From Fiction @commobserver #CMBS https://t.co/jnpJrtHWKS
Third Avenue Office Landlords Battle High Vacancy Rates @trdny #CMBS https://t.co/WVqQOZcAh6
Blackstone and Goldman are gearing up to increase investments in CRE, convinced the market has bottomed out. Plus, Hilton sealed a $210M deal to tap into college towns. - CRE Daily https://t.co/ZH9FheYF52
America’s Office Fire Sale Has Barely Begun - WSJ https://t.co/SOXaq03I7M
$1 Trillion In 2024 CRE Maturities Could Lead To Hundreds Of Bank Failures https://t.co/Z7JLOrK4Fa
#regional bank #crisis returning? #CRE loans are concentrated on regional bank balance sheets. #BTFP has now ended. $3.4 billion was borrowed in the last week, presumably by banks with balance sheet constraints🤷♂️. Regional bank #credit card #deliquincy rates have never been… https://t.co/v04zecQNuM
America’s Office Fire Sale Has Barely Begun https://t.co/B3CecVvVqx
There is still approximately $1 trillion coming due in CRE this year, per Polpo Capital
Calling CRE ‘Manageable’ Is Just Wishful Thinking @business Policymakers calling the roughly $1 trillion of commercial real estate debt coming due this year “manageable” may regret it.
"America’s Office Fire Sale Has Barely Begun" https://t.co/H0S9xavEUz "Pressure is building slowly as leases expire: Many companies are reducing their space by 30% to 40% when their contracts end." https://t.co/eitffLqcHF
America’s Office Fire Sale Has Barely Begun @WSJ #CMBS https://t.co/oCFBb1fKus