Oddbean new post about login | logout Downtown commercial Real Estate is not only MASSIVELY impaired, but it’s insanely illiquid…best of luck to the owners when the currency and credit collapse starts accelerate. IMHO we ain’t seen nothin’ yet…and speed of settlement is going to be of the essence. https://www.zerohedge.com/markets/older-office-towers-cities-face-tsunami-trouble
The valuation change is likely permanent but do you think the funds believe they can push a few years down the road? As with most things, timing matters. When will the CRE credit crisis hit? If banks and investors are okay changing terms and delaying payouts couldn’t this futility last several years?
I mean that’s the play…try to keep it unrealized long enough…but where the property value will really start to struggle is on the massive CAPEX and growing vacancy (or rates they can charge)
Some are realising losses now, and on the flip side the buyer in the same deal sees value despite the capex, unless the plan is to demolish (attractive discount may help the economic case) https://www.bisnow.com/new-york/news/office/ubs-auctions-off-office-tower-for-975-loss-125334
Time to buy a skyscraper
Hold the line WFH'ers, don't bail theres gamblers out!!!
Could it be related to Buffet selling 981 millions shares of Bank of America ? 🤔
PP, my wife and I have traveled the country this summer, I reside in Austin which is supposedly leads the nation in occupancy. I can say I don’t see it. In many cities I see the same, empty offices and closed stores especially in the downtown areas. I am sitting at a coffee shop in downtown Denver as I write this and it’s very sad to see.
Maybe the impairment is the grift
Large employers are pushing for return to office mandates, and corporate media are trying to help spin that this is a good idea, and what people want. The vacancy levels in aggregate that everyone can see with their own eyes tells you the truth despite the legacy media spin. https://www.afr.com/work-and-careers/workplace/why-gen-z-are-leading-the-way-on-five-days-a-week-back-in-the-office-20240821-p5k424?utm_medium=Social&utm_campaign=nc&utm_source=LinkedI