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while Chicago has $3.8 billion, and New York and Los Angeles each have $3.2 billion. As government downsizing and shifting priorities impact these leases, the commercial real estate market may experience significant shifts, leading to increased distress and a potential increase in loan defaults.
February 24, 2025 at 4:29 AM
while Chicago has $3.8 billion, and New York and Los Angeles each have $3.2 billion. As government downsizing and shifting priorities impact these leases, the commercial real estate market may experience significant shifts, leading to increased distress and a potential increase in loan defaults.
Approximately $28 billion in CMBS loans are tied to properties with government leases, including $12 billion specifically backed by GSA leases, which are at higher risk of default. Washington, D.C., and Arlington, VA, together account for $8.4 billion in CMBS debt linked to government leases,
February 24, 2025 at 4:28 AM
Approximately $28 billion in CMBS loans are tied to properties with government leases, including $12 billion specifically backed by GSA leases, which are at higher risk of default. Washington, D.C., and Arlington, VA, together account for $8.4 billion in CMBS debt linked to government leases,
Local and regional banks in these markets may tighten lending across all property types to mitigate potential losses and manage the risks associated with office space distress. As a result, borrowers may be forced to seek alternative sources of capital in the near future.
February 24, 2025 at 4:27 AM
Local and regional banks in these markets may tighten lending across all property types to mitigate potential losses and manage the risks associated with office space distress. As a result, borrowers may be forced to seek alternative sources of capital in the near future.
And how will it affect smaller local and regional banks that are already heavily exposed to commercial real estate?
GSA leases are particularly concentrated in major metropolitan areas, especially Washington, D.C., and Virginia.
GSA leases are particularly concentrated in major metropolitan areas, especially Washington, D.C., and Virginia.
February 24, 2025 at 4:26 AM
And how will it affect smaller local and regional banks that are already heavily exposed to commercial real estate?
GSA leases are particularly concentrated in major metropolitan areas, especially Washington, D.C., and Virginia.
GSA leases are particularly concentrated in major metropolitan areas, especially Washington, D.C., and Virginia.
Office buildings with a significant concentration of GSA tenants may begin to underperform. It is estimated that around 370 million square feet are leased by the GSA in 9,600 buildings across 2,200 communities.
Could this lead to higher default rates on loans secured by these properties?
Could this lead to higher default rates on loans secured by these properties?
February 24, 2025 at 4:23 AM
Office buildings with a significant concentration of GSA tenants may begin to underperform. It is estimated that around 370 million square feet are leased by the GSA in 9,600 buildings across 2,200 communities.
Could this lead to higher default rates on loans secured by these properties?
Could this lead to higher default rates on loans secured by these properties?
and the risk of revenue drops and loan defaults would be minimized.
However, with the government’s current plans to reduce the size of federal agencies and shrink its real estate footprint, the appropriations clause may become more of a concern.
However, with the government’s current plans to reduce the size of federal agencies and shrink its real estate footprint, the appropriations clause may become more of a concern.
February 24, 2025 at 4:21 AM
and the risk of revenue drops and loan defaults would be minimized.
However, with the government’s current plans to reduce the size of federal agencies and shrink its real estate footprint, the appropriations clause may become more of a concern.
However, with the government’s current plans to reduce the size of federal agencies and shrink its real estate footprint, the appropriations clause may become more of a concern.
In other words, if funding is unavailable, the government can cancel the lease, protecting itself from paying rent when the budget doesn’t allow for it. Historically, I’ve been reassured that the federal budget would always be approved, meaning these leases wouldn’t be terminated prematurely,
February 24, 2025 at 4:19 AM
In other words, if funding is unavailable, the government can cancel the lease, protecting itself from paying rent when the budget doesn’t allow for it. Historically, I’ve been reassured that the federal budget would always be approved, meaning these leases wouldn’t be terminated prematurely,
The main challenge when lending on these assets has always been how to navigate the appropriations clause. This provision states that the government is only obligated to pay rent for leased space if Congress has allocated the necessary funds through an appropriations bill.
February 24, 2025 at 4:17 AM
The main challenge when lending on these assets has always been how to navigate the appropriations clause. This provision states that the government is only obligated to pay rent for leased space if Congress has allocated the necessary funds through an appropriations bill.
This further reinforces our belief that the office market is either at or near the bottom, with more capital flowing in to take advantage of these distressed assets at historically attractive levels.
February 6, 2025 at 5:50 AM
This further reinforces our belief that the office market is either at or near the bottom, with more capital flowing in to take advantage of these distressed assets at historically attractive levels.
discounts, presenting opportunities for creative repositioning strategies.
What’s your take on the office sector’s future? Are you seeing similar trends in your markets or anticipating a different trajectory? Let’s discuss!
What’s your take on the office sector’s future? Are you seeing similar trends in your markets or anticipating a different trajectory? Let’s discuss!
February 3, 2025 at 10:30 PM
discounts, presenting opportunities for creative repositioning strategies.
What’s your take on the office sector’s future? Are you seeing similar trends in your markets or anticipating a different trajectory? Let’s discuss!
What’s your take on the office sector’s future? Are you seeing similar trends in your markets or anticipating a different trajectory? Let’s discuss!
assets.
A near halt in new construction due to current market conditions.
Potential office-to-multifamily conversions. The Office Conversion Accelerator Team in NYC will be very busy.
With less high-quality supply and declining asset values, remaining office properties could be available at
A near halt in new construction due to current market conditions.
Potential office-to-multifamily conversions. The Office Conversion Accelerator Team in NYC will be very busy.
With less high-quality supply and declining asset values, remaining office properties could be available at
February 3, 2025 at 10:28 PM
assets.
A near halt in new construction due to current market conditions.
Potential office-to-multifamily conversions. The Office Conversion Accelerator Team in NYC will be very busy.
With less high-quality supply and declining asset values, remaining office properties could be available at
A near halt in new construction due to current market conditions.
Potential office-to-multifamily conversions. The Office Conversion Accelerator Team in NYC will be very busy.
With less high-quality supply and declining asset values, remaining office properties could be available at
may somewhat offset rising delinquencies.
The Opportunity: If 2025 marks the bottom of the office market, the second half of the year could offer key opportunities for investors. The supply of high-quality office space may shrink due to:
The flight to quality with lower-than-normal rents in Class-A
The Opportunity: If 2025 marks the bottom of the office market, the second half of the year could offer key opportunities for investors. The supply of high-quality office space may shrink due to:
The flight to quality with lower-than-normal rents in Class-A
February 3, 2025 at 10:27 PM
may somewhat offset rising delinquencies.
The Opportunity: If 2025 marks the bottom of the office market, the second half of the year could offer key opportunities for investors. The supply of high-quality office space may shrink due to:
The flight to quality with lower-than-normal rents in Class-A
The Opportunity: If 2025 marks the bottom of the office market, the second half of the year could offer key opportunities for investors. The supply of high-quality office space may shrink due to:
The flight to quality with lower-than-normal rents in Class-A
Maturity Schedule Impact: A large number of office loans maturing in 2025 will lead to more defaults.
Government Lease Reductions: Cuts to government workers and leases will further pressure the sector, particularly in DC.
Loan Issuance: Increased office loan issuance in 2024
Government Lease Reductions: Cuts to government workers and leases will further pressure the sector, particularly in DC.
Loan Issuance: Increased office loan issuance in 2024
February 3, 2025 at 10:25 PM
Maturity Schedule Impact: A large number of office loans maturing in 2025 will lead to more defaults.
Government Lease Reductions: Cuts to government workers and leases will further pressure the sector, particularly in DC.
Loan Issuance: Increased office loan issuance in 2024
Government Lease Reductions: Cuts to government workers and leases will further pressure the sector, particularly in DC.
Loan Issuance: Increased office loan issuance in 2024
driven by several factors:
Eroding Performance: Many distressed office properties may not reach maturity defaults but will struggle to service their debt as revenues decline.
Refinancing Challenges: Falling cash flows and appraised values will make refinancing difficult for many owners.
Eroding Performance: Many distressed office properties may not reach maturity defaults but will struggle to service their debt as revenues decline.
Refinancing Challenges: Falling cash flows and appraised values will make refinancing difficult for many owners.
February 3, 2025 at 10:23 PM
driven by several factors:
Eroding Performance: Many distressed office properties may not reach maturity defaults but will struggle to service their debt as revenues decline.
Refinancing Challenges: Falling cash flows and appraised values will make refinancing difficult for many owners.
Eroding Performance: Many distressed office properties may not reach maturity defaults but will struggle to service their debt as revenues decline.
Refinancing Challenges: Falling cash flows and appraised values will make refinancing difficult for many owners.
12th straight quarter of negative absorption for office space, totaling -57 million square feet for the year, a 15.43% decline from 2023. However, negative absorption in class-A space was only 61,000 sf.
Looking Ahead: Trepp forecasts Office delinquency rates could peak between 14%-16%,
Looking Ahead: Trepp forecasts Office delinquency rates could peak between 14%-16%,
February 3, 2025 at 10:21 PM
12th straight quarter of negative absorption for office space, totaling -57 million square feet for the year, a 15.43% decline from 2023. However, negative absorption in class-A space was only 61,000 sf.
Looking Ahead: Trepp forecasts Office delinquency rates could peak between 14%-16%,
Looking Ahead: Trepp forecasts Office delinquency rates could peak between 14%-16%,
As we navigate these uncertainties, keeping an eye on the 10-year Treasury could provide invaluable insights into what lies ahead for the Commercial Real Estate Financing Markets.
January 16, 2025 at 10:11 PM
As we navigate these uncertainties, keeping an eye on the 10-year Treasury could provide invaluable insights into what lies ahead for the Commercial Real Estate Financing Markets.
The answer often lies in the 10-year Treasury. It continues to serve as a powerful barometer of global institutional sentiment, offering insights into how markets perceive economic conditions worldwide and acting as a potential guardrail on policy.
January 16, 2025 at 10:10 PM
The answer often lies in the 10-year Treasury. It continues to serve as a powerful barometer of global institutional sentiment, offering insights into how markets perceive economic conditions worldwide and acting as a potential guardrail on policy.
Each of these factors has the potential to reshape interest rates and market dynamics. But how can anyone accurately predict the ripple effects of these policies, especially when their scale remains uncertain?
January 16, 2025 at 10:09 PM
Each of these factors has the potential to reshape interest rates and market dynamics. But how can anyone accurately predict the ripple effects of these policies, especially when their scale remains uncertain?
Key policy changes on the horizon could have significant impacts:
-Immigration policy: Could shifts in labor markets drive inflation?
-Tax cuts: Will a major cut increase the deficit and fuel inflationary pressures?
-Tariffs: Could rising tariffs push up prices and further stoke inflation?
January 16, 2025 at 10:08 PM
Key policy changes on the horizon could have significant impacts:
-Immigration policy: Could shifts in labor markets drive inflation?
-Tax cuts: Will a major cut increase the deficit and fuel inflationary pressures?
-Tariffs: Could rising tariffs push up prices and further stoke inflation?
She quickly shook his hand, and with a warm smile, he replied, “Don’t worry, it happens all the time,” before continuing his way down the aisle, shaking hands with everyone on the plane. Always a gentleman.
December 30, 2024 at 4:35 PM
She quickly shook his hand, and with a warm smile, he replied, “Don’t worry, it happens all the time,” before continuing his way down the aisle, shaking hands with everyone on the plane. Always a gentleman.
Her face turned pale, and she looked mortified.
A few moments later, as the man made his way back to first class, he passed by our row again. The woman, now realizing who he was, jumped to her feet and exclaimed, “President Carter, I’m so embarrassed! I didn’t recognize you!”
A few moments later, as the man made his way back to first class, he passed by our row again. The woman, now realizing who he was, jumped to her feet and exclaimed, “President Carter, I’m so embarrassed! I didn’t recognize you!”
December 30, 2024 at 4:34 PM
Her face turned pale, and she looked mortified.
A few moments later, as the man made his way back to first class, he passed by our row again. The woman, now realizing who he was, jumped to her feet and exclaimed, “President Carter, I’m so embarrassed! I didn’t recognize you!”
A few moments later, as the man made his way back to first class, he passed by our row again. The woman, now realizing who he was, jumped to her feet and exclaimed, “President Carter, I’m so embarrassed! I didn’t recognize you!”