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Started By
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The actual upcoming real estate crisis. CRE loans and vacant office buildings
Posted on 9/26/23 at 9:04 am
Posted on 9/26/23 at 9:04 am
quote:
Nearly 700 US banks now exceed the 2006 Commercial Real Estate (CRE) loan concentration guidance.
What is the CRE loan concentration guidance?
It's guidance by the FDIC for the amount of exposure that small banks should have to CRE loans.
Currently, small banks hold over 70% of CRE loans which is $2 trillion worth of loans.
Meanwhile, $1.5 trillion of CRE loans are set to be refinanced at much higher rates by 2025.
All as office vacancies are at historic highs and CRE prices are in bear market territory.
The WSJ posted an article yesterday morning about the looming office doom in Atlanta
Even a Booming Economy Can’t Save Atlanta’s Office Market
San Fran is already experiencing it worse than Atlanta or any major city
KBS fund poised to surrender Downtown SF office building to lender
Swift defaults $62M loan tied to historic SF office building
Covid leading to more people WFH led us here but also the stupidity of the system. Many of these properties are financed on balloon loans and now those loans are all due within the next year or two. It wasn't really a concern in the past as at the end of the term it was easy to refinance or get a bridge loan to buy time to find another balloon loan or something more permanent.
Due to high vacancy rates banks are not looking to keep financing these deals with either a balloon or bridge loan. Also, the companies having to refi at higher rates is killing any cashflow on the buildings making them unattractive to keep or buy.
The fear is that as they all come due more and more buildings will go into default which will lead to more consolidation in the banking industry
This post was edited on 9/26/23 at 9:06 am
20
Posted on 9/26/23 at 9:06 am to stout
And now you have the real reason they want a return to the office. Workers who earned increased flexibility must sacrifice for the greater good to clean up the mistakes of idiot bankers.
Some things never change.
Some things never change.
Posted on 9/26/23 at 9:07 am to stout
I love your threads. They remind me how crappy life is and how it really isn't worth living. Thanks for making sure the O-T stays a depressing shithole. 
Posted on 9/26/23 at 9:11 am to lnomm34
Amazing that my wife can't find another office space in Pensacola.
Posted on 9/26/23 at 9:12 am to XenScott
quote:
Amazing that my wife can't find another office space in Pensacola.
There will always be exceptions to anything.
Posted on 9/26/23 at 9:13 am to XenScott
quote:
Amazing that my wife can't find another office space in Pensacola.
Amazing how one anecdote doesn't disprove OP's data.
Posted on 9/26/23 at 9:13 am to lnomm34
Posted on 9/26/23 at 9:16 am to lnomm34
Well when people say, “I don’t care about politics, it doesn’t affect my daily life”.
Au contraire
Au contraire
Posted on 9/26/23 at 9:17 am to lnomm34
quote:
They remind me how crappy life is and how it really isn't worth living.
Would you rather be the frog in the pot not realizing you’re boiling until it’s too late?
Posted on 9/26/23 at 9:18 am to GetCocky11
quote:
Amazing how one anecdote doesn't disprove OP's data.
Yea not being able to find a small office to rent for a few thousand dollars for her small business isn't necessarily what this is about. A lot of this has to do with large corporations that usually rent multiple floors but are instead reducing their office footprint through WFH. I am not saying small offices aren't part of it but it's not the major issue.
Look how Elon gutteD Twitter and then basically forced his lease to be renegotiated. Just a small example.
This post was edited on 9/26/23 at 1:16 pm
Posted on 9/26/23 at 9:19 am to stout
I just got back from London and there is massive amounts of vacant commercial space. Entire office high rises, retail store space, food and bev space. It's shocking how you can't walk a single block without seeing Sales or For Lease spaces. Not sure if the UK leads or trails our domestic market.
Posted on 9/26/23 at 9:21 am to The Pirate King
quote:
Would you rather be the frog in the pot not realizing you’re boiling until it’s too late?
I think everyone with a brain knows that the current economic climate is unsustainable and something is going to happen. What do you want me to do about it? I am in the pot boiling, I can't jump out and turn the gas off.
The Money Talk board or the Political Talk board would both be more appropriate to discuss this topic. I miss when the O-T was a place to frick off and find light-hearted shite to discuss to get away from the constant negativity in the world. Now it's a continual cesspool of depressing news stories. And here I am, reading the shite.
Posted on 9/26/23 at 9:25 am to stout
quote:
Look how Elon gutter Twitter and then basically forced his lease to be renegotiated. Just a small example
Office market dynamics have been changing for over a decade. Covid just accelerated the inevitable. Retail is following to a lesser degree. Industrial, MF and self storage will remain stable despite the market adjustments for interest rates and cap rates.
Posted on 9/26/23 at 9:27 am to The Pirate King
quote:
Would you rather be the frog in the pot not realizing you’re boiling until it’s too late?
Exactly.
quote:
STOUT
When I see a post from STOUT, it is always the first one I open on the entire site. I love real estate and everything associated with it. STOUT delivers solid info every time.
Posted on 9/26/23 at 9:28 am to stout
Many smaller banks have already had to pause commercial lending due to lack of deposits.
The middle class is running out of money
The middle class is running out of money
Posted on 9/26/23 at 9:30 am to lnomm34
I agree with you. This board is very negative now.
Posted on 9/26/23 at 9:33 am to stout
I wouldn't worry. Eventuallly it's going to affect the wrong person, and the government is gonna bail their asses out just like they do every time their big money donors are affected.
It's easier for them to continue screwing the middle class. Gotta protect the big boys.
It's easier for them to continue screwing the middle class. Gotta protect the big boys.
Posted on 9/26/23 at 9:34 am to jbgleason
quote:
I just got back from London
London was impacted by Brexit. For instance the EMA left an entire building in Canary Wharf. Not saying that there are not other impacts at play, but I am guessing will be a while before they get back to pre-Brexit capacity.
Posted on 9/26/23 at 9:35 am to dandyjohn
quote:
And now you have the real reason they want a return to the office.
Right now there’s IT groups with Humana they’re trying to push back into the office up to 3 days a week.
They had the audacity to say they weren’t productive from home and when asked for that data they couldn’t come up with it. Shortly after, they found out one of their higher ups was pushing for the return to justify a building they utilize.
Posted on 9/26/23 at 9:35 am to stout
#distressedassets
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