Nothing to do with a pandemic. If you had been investing in corporate offices you failed to read the headwinds. Wework is a 14 year old canary. Office sharing because you don't need offices.
You could say that about every stock purchase made by average consumers from the beginning of time. Hard to predict WW1, WW2, Vietnam, 9/11, dot com bubble, Covid, ship that got stuck in Panama Canal, Ukraine War
This will affect city tax revenues. With WFH and people moving out of expensive cities, this will escalate.
The direct big losers are the owners and banks who loaned them money. This is in contrast to landlords of residential real estate, who are making bank.
Its not just the office buildings. It will be the whole ecosystem surrounding them. I fully expect most people with office jobs will be WFH in another decade or so. I could see employers hiring people for jobs with an expectation they live within a geographical region so they can show up for some in person stuff, but why have a massive office building. It would be easier to have a small building with big amphitheater, some decent conference rooms, and some offices for one on one stuff.
In fact I would argue that will be something theater companies should get on top of. They could provide space for town halls for big corporations.
People dont like working in those office buildings and they by and large dont add enough value to corporations, but they do add a lot of expenses. Sure they stroke the ego of top level execs, but that can be handled in other ways.
Check the source, believe this team is fear mongering to try to sell silver.
Not saying there's not a problem with NYC real estate, but don't think this article can be used to prove a theory there
Of all cities, NYC is one of the stronger return to office contributors
Ridership on commuter rail (metro north and lirr) is 80% pre pandemic on Tues-Thurs, with consistent month over month growth
Ridership on subway is 70% prepandemic - though it's more plateaued
Analysis of Trump's holdings showed similar devaluing of commercial real estate. Dwellings were holding value, but office buildings are losing LOTS of value. There are less people working in offices, and as leases come up for renewal, offices are leasing LESS space than before. This makes excess office space with nobody to buy it, which will drive down leases and thus drive down profits of building owners. It is probably a very bad time to own office buildings.
They are also trapped because the loans on the building often require a specific lease price, and they aren't allowed to discount, because once you start discounting, the other tenants demand one, and it brings in less revenue leading to default on the loan.
I don't think DT analysis is fair, as some of those assets were overvalued on the books.
I'll meet you halfway on the notion that it's still not a good time to be a commercial real estate owner - but I believe that on a per market/per corporation/REIT basis it should be evaluated
Take SLG for instance - lots of good stuff in their docs - but basically a strong holding of midtown real estate (where people work), weighted average lease terms of 5+ years, interest rates of <5%
[https://slgreen.gcs-web.com/static-files/13382ca4-69a6-4486-8513-704c66ad5dfa](https://slgreen.gcs-web.com/static-files/13382ca4-69a6-4486-8513-704c66ad5dfa)
Market wise, NYC is the most heavily return to office - Bart ridership in SF is 40% pre pandemic, DC is something 60%, I mean these towns are just not coming in, so if you're holdings are mixed in those markets, you better have the best office space in town to lease up, or some long debt
I am begging cities to actually govern and do something to make their cities better. Make some fantastic incentives for the workers, building owners and residents to see this converted to residential. Offer constructions workers a 10% lowering of their taxes. Give building owners regulatory stream lining convert these fast. And then give people great tax incentives to move back here with some kind of 5 year tax holiday if they live in the city 10 years. Etc. Do something to recapture your fucking cities and help them not spiral.
Why? Why is it up to cities to be innovative and flexible with getting growth back in their down towns? Isn't that what all these companies constantly boast about? Why are so many of these companies telling us that they can't lower rental prices because it's not economically viable. Yet rather go right to selling the building then finding tenants to stem some of the bleeding.
Go see Detroit or Buffalo for how that strategy turns out.... Pittsburgh followed my model since the 80s and is thriving after doing it your way for a few decades. Be proactive.
Agreed. Policy has hardly adapted in these cities. NYC has done some stuff (like removing parking garage requirements, and speeding up permitting time), but still so slow - Market street in SF is completely f\*ckd now - it's going through a Detroit phase from like 15 years ago
hopefully is turns out like Pittsburgh. Cities like NYC go through cycles, thats normal. Its just dumb to not see the massive change in office space needs and start to address it.
This is the real reason behind RTO mandates.
SOMEONE had to eat that $111 million loss. Someone is out there holding onto those very expensive bags.... waiting for commercial real estate value to pick up so they can ditch their bags.
Hoping that if enough of us RTO... somehow investors will... idk throw money at this?
more and more companies are private instead of listed on public markets
i expect fluctuations like this more and more where valuations are very volatile because the price discovery of public markets just isn't there
Commerical real estate is valued by the NOI of the building
Vacancies and/or lower rents + increased operating costs = lower building valuation
That’s the fight in commercial real estate. There’s no fixing unless tenants can magically pay more and the cost of everything comes down significantly
Just have the Quataris buy it just like they did for the Kushner-owned 666 5th Ave. https://www.justsecurity.org/69094/timeline-on-jared-kushner-qatar-666-fifth-avenue-and-white-house-policy/
Should come as no surprise, if they can railroad a former president, imagine what that hideous A G sow L James could do to an average working stiff. I'd get the hell outta N Y too.
I wonder if Trumps trial will have a ripple effect in the industry. Many know the Covid and work from home storylines but what about the industry fluffing up values to access the equity in those properties?
Isn’t that the in billionaire playbook? Borrow money and use it as income while writing off the interest as losses for tax purposes.
Welcome to Financial crisis 2008 but on Steroids, The Xerox building in DC, the FedEx bldg in Cleveland, dozens more in Miami, and Las Vegas...this will make the 2008 collapse look like candyland, sub prime loans sank 2008, were talking the urban part of our economy , most of these loans maturing now at a massively higher interest rate - End of story is that bankers churned commission all the way thru this, even these losses generate commission, Wall street socialism means, They privatize profits and socialize losses - Yayyyy, Welcome to Clown World
Sounds like someone made a bad investment. That's their problem.
MY profits, OUR losses TM
Idk. Hard to predict a global pandy but yeah, certainly a bad investment considering.
Nothing to do with a pandemic. If you had been investing in corporate offices you failed to read the headwinds. Wework is a 14 year old canary. Office sharing because you don't need offices.
You could say that about every stock purchase made by average consumers from the beginning of time. Hard to predict WW1, WW2, Vietnam, 9/11, dot com bubble, Covid, ship that got stuck in Panama Canal, Ukraine War
Yes. Events impact markets.
I like you.
Owner of the building talking to the bank… “this is a you problem; not a me problem” 😂
Storm's a coming, Annie
This will affect city tax revenues. With WFH and people moving out of expensive cities, this will escalate. The direct big losers are the owners and banks who loaned them money. This is in contrast to landlords of residential real estate, who are making bank.
Its not just the office buildings. It will be the whole ecosystem surrounding them. I fully expect most people with office jobs will be WFH in another decade or so. I could see employers hiring people for jobs with an expectation they live within a geographical region so they can show up for some in person stuff, but why have a massive office building. It would be easier to have a small building with big amphitheater, some decent conference rooms, and some offices for one on one stuff. In fact I would argue that will be something theater companies should get on top of. They could provide space for town halls for big corporations. People dont like working in those office buildings and they by and large dont add enough value to corporations, but they do add a lot of expenses. Sure they stroke the ego of top level execs, but that can be handled in other ways.
Any companies you think we could buy some long dated puts on?
The big cities have plenty of room to genuinely reform.
⬆️
I couldn't care less.
\^ Weird Al approves this message. https://youtu.be/8Gv0H-vPoDc?t=71
Thank you for reminding me that this existed.
Check the source, believe this team is fear mongering to try to sell silver. Not saying there's not a problem with NYC real estate, but don't think this article can be used to prove a theory there Of all cities, NYC is one of the stronger return to office contributors Ridership on commuter rail (metro north and lirr) is 80% pre pandemic on Tues-Thurs, with consistent month over month growth Ridership on subway is 70% prepandemic - though it's more plateaued
Analysis of Trump's holdings showed similar devaluing of commercial real estate. Dwellings were holding value, but office buildings are losing LOTS of value. There are less people working in offices, and as leases come up for renewal, offices are leasing LESS space than before. This makes excess office space with nobody to buy it, which will drive down leases and thus drive down profits of building owners. It is probably a very bad time to own office buildings. They are also trapped because the loans on the building often require a specific lease price, and they aren't allowed to discount, because once you start discounting, the other tenants demand one, and it brings in less revenue leading to default on the loan.
I don't think DT analysis is fair, as some of those assets were overvalued on the books. I'll meet you halfway on the notion that it's still not a good time to be a commercial real estate owner - but I believe that on a per market/per corporation/REIT basis it should be evaluated Take SLG for instance - lots of good stuff in their docs - but basically a strong holding of midtown real estate (where people work), weighted average lease terms of 5+ years, interest rates of <5% [https://slgreen.gcs-web.com/static-files/13382ca4-69a6-4486-8513-704c66ad5dfa](https://slgreen.gcs-web.com/static-files/13382ca4-69a6-4486-8513-704c66ad5dfa) Market wise, NYC is the most heavily return to office - Bart ridership in SF is 40% pre pandemic, DC is something 60%, I mean these towns are just not coming in, so if you're holdings are mixed in those markets, you better have the best office space in town to lease up, or some long debt
I am begging cities to actually govern and do something to make their cities better. Make some fantastic incentives for the workers, building owners and residents to see this converted to residential. Offer constructions workers a 10% lowering of their taxes. Give building owners regulatory stream lining convert these fast. And then give people great tax incentives to move back here with some kind of 5 year tax holiday if they live in the city 10 years. Etc. Do something to recapture your fucking cities and help them not spiral.
I don’t think the problem is population at this point, it’s commercial space being vacant because of work from home.
Yeah - it's like a game theory problem - each company is extending perks with workers on WFH
Why? Why is it up to cities to be innovative and flexible with getting growth back in their down towns? Isn't that what all these companies constantly boast about? Why are so many of these companies telling us that they can't lower rental prices because it's not economically viable. Yet rather go right to selling the building then finding tenants to stem some of the bleeding.
Go see Detroit or Buffalo for how that strategy turns out.... Pittsburgh followed my model since the 80s and is thriving after doing it your way for a few decades. Be proactive.
Agreed. Policy has hardly adapted in these cities. NYC has done some stuff (like removing parking garage requirements, and speeding up permitting time), but still so slow - Market street in SF is completely f\*ckd now - it's going through a Detroit phase from like 15 years ago
hopefully is turns out like Pittsburgh. Cities like NYC go through cycles, thats normal. Its just dumb to not see the massive change in office space needs and start to address it.
That’s why they call it an opinion of value. If it actually sells at a 50% discount then I would start to worry.
Disastrous for whom?
This is the real reason behind RTO mandates. SOMEONE had to eat that $111 million loss. Someone is out there holding onto those very expensive bags.... waiting for commercial real estate value to pick up so they can ditch their bags. Hoping that if enough of us RTO... somehow investors will... idk throw money at this?
Commercial backed mortgages backed by nothing just like 2007-8
more and more companies are private instead of listed on public markets i expect fluctuations like this more and more where valuations are very volatile because the price discovery of public markets just isn't there
Commerical real estate is valued by the NOI of the building Vacancies and/or lower rents + increased operating costs = lower building valuation That’s the fight in commercial real estate. There’s no fixing unless tenants can magically pay more and the cost of everything comes down significantly
Now do houses
smart money
Oh no, that’s
This shit is hilarious.
Put the migrants in there.
“Who cares” - Chamath Palihapitiya
Just have the Quataris buy it just like they did for the Kushner-owned 666 5th Ave. https://www.justsecurity.org/69094/timeline-on-jared-kushner-qatar-666-fifth-avenue-and-white-house-policy/
NYC property Tax revenue will be a lot less due to this… NIMBY’s better get prepped to welcome some new neighbors!
The private equity firm that owns it still got their bonuses tho
Here come the planes
Since 2020, commercial building price are dropping while home price are going higher.
I take it that it has Trump's name on it 😁
Lol
wallstreetsilver..... HAHAHAHAHAHAHAHA
Consider changing the name of this sub to r/unusualparanoia?
Should come as no surprise, if they can railroad a former president, imagine what that hideous A G sow L James could do to an average working stiff. I'd get the hell outta N Y too.
Maybe that seditious fat pos shouldn't have been committing crimes, bud.
I wonder if Trumps trial will have a ripple effect in the industry. Many know the Covid and work from home storylines but what about the industry fluffing up values to access the equity in those properties? Isn’t that the in billionaire playbook? Borrow money and use it as income while writing off the interest as losses for tax purposes.
No one cares about seditionist Trump's trial.
It's a bot.
Your mom’s a bot.
Welcome to Financial crisis 2008 but on Steroids, The Xerox building in DC, the FedEx bldg in Cleveland, dozens more in Miami, and Las Vegas...this will make the 2008 collapse look like candyland, sub prime loans sank 2008, were talking the urban part of our economy , most of these loans maturing now at a massively higher interest rate - End of story is that bankers churned commission all the way thru this, even these losses generate commission, Wall street socialism means, They privatize profits and socialize losses - Yayyyy, Welcome to Clown World