Office Vacancies Hit Record High Across US Cities As CRE Downturn Worsens

[Ptarmigan]

Office Vacancies Hit Record High Across US Cities As CRE Downturn Worsens
https://www.zerohedge.com/markets/office-vacancies-hit-record-across-us-cities-cre-downturn-worsens

Courtesy of the Federal Reserve's most aggressive interest rate hiking cycle in a generation, a surge in remote work in a post-Covid world, and imploding Democrat-run cities with radical progressives in City Halls who fail to enforce common sense 'law and order,' the office sector is reeling and faces an accelerated downturn.

New data from Moody's Analytics shows that 19.6% of office space across major US metro areas was not leased as of the fourth quarter of 2023, exceeding the previous high of 19.3% in the commercial real estate downturn between 1986 and 1991.

Commercial real estate vacancy is on par with 1986 to 1991. It is trending upwards.

"The bulk of the vacant space are buildings that were built in the 1950s, '60s, '70s, and '80s," Mary Ann Tighe, chief executive of the New York tri-state region at real-estate brokerage CBRE, told The Wall Street Journal.

The new record directly reflects the remote and hybrid work trends that have surged since Covid as companies reduce overall corporate footprints.



Kastle Systems, the gold-standard measure of office-occupancy trends via card-swipe data, has yet to recover from pre-Covid levels.



Another driver of rising office vacancy, but not mentioned in the WSJ report nor other legacy corporate media outlets covering the new Moody's Analytics data, is that failed social justice reforms in Democrat cities have forced companies to shift operations to safer areas. This is a topic widely ignored by woke journos.

COVID and social justice reforms are factors for office vacancies in American cities.

[fatboy]

The liberals predictably see this as the rich getting hosed by their own greed but when the commercial mortgage notes start coming due and no money is available to refinance at a reasonable rate, the banks are going to get the rug pulled meaning the actual tax payers will have to bail them out again. If it were just one or two cities, it would be one thing but it's just about every large coastal urban area so my guess the fed will drastically lower interest rates and the president will push a bailout thus inflation is not going to abate.

In the case of NYC in the Manhattan business district I don't see a solution that restores this area, the homeless tent dwellers/drug abusers are hard at work making the place as unpleasant to work in as possible and the landlords are going to be stuck holding the bag because of low tenant utilization and high mortgage rates. Local small businesses are going to become extinct. I think in 15 years Detroit will look good in comparison.

[Old n Grumpy]

They can fill them with homeless and illegals solving the housing shortage.

The liberals predictably see this as the rich getting hosed by their own greed but when the commercial mortgage notes start coming due and no money is available to refinance at a reasonable rate, the banks are going to get the rug pulled meaning the actual tax payers will have to bail them out again. If it were just one or two cities, it would be one thing but it's just about every large coastal urban area so my guess the fed will drastically lower interest rates and the president will push a bailout thus inflation is not going to abate.

In the case of NYC in the Manhattan business district I don't see a solution that restores this area, the homeless tent dwellers/drug abusers are hard at work making the place as unpleasant to work in as possible and the landlords are going to be stuck holding the bag because of low tenant utilization and high mortgage rates. Local small businesses are going to become extinct. I think in 15 years Detroit will look good in comparison.

[fatboy]

They can fill them with homeless and illegals solving the housing shortage.

I was watching a youtube video on a WW2 era NAZI defensive bunker I think in remote coastal Norway, the kind of place that has 15' think walls and no windows. Since it's out in the middle of no-where and built to survive heavy bombardment, it has survived father time in generally good condition. Some machinery still there and wiring but of course some flooding as the pumps haven't been running for 80 years.

Anyway in the comments section someone suggested converting it into shelter for the un-housed or low income. With that a number of commenters expressed agreement as if this was a good idea.

But alas look for the Biden administration to give the banks some bux to convert office buildings into housing. This would be part of the bailout of the banks holding the bag with commercial RE about to go underwater.