tede02 Posted September 20, 2023 Share Posted September 20, 2023 My gut tells me 2023 will be the bottom for office REITs unless we get a big economic downturn in 2024. Sentiment has been so negative. But who knows. I'm not making any big bets. It's tough to gauge what the next 1-2 years looks like. Corporate America is calling everyone back. Yet, my neighbor who works for Wells Fargo and is in a position to know, told me that despite the call back to the office, the company is cutting its office foot print. This is just one anecdote but it made me think weakness will persist probably for several years as leases expire and companies trim down to what they've realized they actually need in the post-pandemic world. Maybe that means cutting 5-10% of leased space across corporate America. One thing I've learned in markets is how price is always set at the margins. In other words, relatively small changes in supply or demand of anything can really disrupt a market. Link to comment Share on other sites More sharing options...
lnofeisone Posted October 17, 2023 Share Posted October 17, 2023 https://www.bloomberg.com/news/articles/2023-10-16/american-work-from-home-rates-drop-to-lowest-since-the-pandemic#xj4y7vzkg Link to comment Share on other sites More sharing options...
Gamecock-YT Posted October 18, 2023 Share Posted October 18, 2023 Link to comment Share on other sites More sharing options...
tede02 Posted October 18, 2023 Share Posted October 18, 2023 8 hours ago, Gamecock-YT said: This doesn't surprise me given that most office real estate is leveraged 50%. A 25% decline in price hits the equity by 50%. It's going to be rough waters for some time. Most buildings probably don't economically work in this rate environment unless they're at least 80% leased. Link to comment Share on other sites More sharing options...
dcollon Posted October 31, 2023 Share Posted October 31, 2023 https://www.bloomberg.com/news/articles/2023-10-31/despite-remote-work-downtown-nashville-is-thriving-for-residents-and-visitors?srnd=premium Link to comment Share on other sites More sharing options...
ValueArb Posted November 8, 2023 Share Posted November 8, 2023 (edited) From WSJ: Quote The sale of Signature Bank’s $33 billion in commercial-property loans and other assets is expected to attract bids as much as 40% below face value, offering new evidence of how much property prices have eroded. Regulators closed Signature Bank in March after a run on its deposits, marking the fourth-largest bank failure in U.S. history. Now, the Federal Deposit Insurance Corp. is auctioning off thousands of Signature loans backed by apartment buildings and other commercial properties primarily in the New York region. Bids are due Thursday on what is the biggest and most closely watched commercial-property sale of the year. Loans are expected to sell on average 15% to 40% below their original face amount, according to prospective bidders. Those discounts will likely affect values of New York commercial property for a number of years. The market will get an initial data point from the coming loan sale and again when the loans are resolved, either through a payoff, a loan sale or a foreclosure, said D. Michael Van Konynenburg, president of real-estate investment-banking firm Eastdil Secured. Signature’s loan sale will provide the ailing commercial real-estate market with one of the clearest benchmarks for how badly values have been eroded by the jump in interest rates and the weak return-to-office rate. Edited November 8, 2023 by ValueArb Link to comment Share on other sites More sharing options...
tede02 Posted November 27, 2023 Share Posted November 27, 2023 This is a very interesting article describing how the fundamentals are in place for the cylce to turn. I'm always fascinated by cyclicality and the basics of supply and demand. There's also an interesting point in the article distinguishing the office recovery from the residential recovery post-GFC. The point is office is more likely to echo the bifurcation in retail space where there are still dying malls across the US but modern "experience" properties are doing exceptionally well. Will be interesting to look back 3-5 years out. https://www.cnbc.com/2023/11/26/the-looming-office-space-real-estate-shortage-yes-shortage.html Link to comment Share on other sites More sharing options...
CorpRaider Posted December 13, 2023 Share Posted December 13, 2023 New 52wk high on SLG. If I'm being honest, I thought it would be at $50 by the time J Pow went on record saying they were done. Link to comment Share on other sites More sharing options...
tede02 Posted December 18, 2023 Share Posted December 18, 2023 Link to comment Share on other sites More sharing options...
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