{"id":1456993,"date":"2024-02-13T00:30:00","date_gmt":"2024-02-13T05:30:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1456993"},"modified":"2024-02-13T00:30:00","modified_gmt":"2024-02-13T05:30:00","slug":"cre-crash-unfolding-yes-thats-not-a-typo-it-literally-sold-for-9-per-sqft","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/cre-crash-unfolding-yes-thats-not-a-typo-it-literally-sold-for-9-per-sqft\/1456993\/","title":{"rendered":"CRE Crash Unfolding: “Yes That’s Not A Typo – It Literally Sold For $9 Per SQFT”\u00a0"},"content":{"rendered":"

CRE Crash Unfolding: “Yes That’s Not A Typo – It Literally Sold For $9 Per SQFT”\u00a0<\/span><\/p>\n

\n

In a commentary, Neil Callanan of Bloomberg highlighted, “The\u00a0commercial real estate crash<\/strong>\u00a0unfolding in the US is a\u00a0natural consequence of quantitative easing<\/strong>.”\u00a0<\/p>\n

Callanan continued: ” … which\u00a0intentionally pushed investors out of safer assets like bonds<\/strong>\u00a0and into alternatives like private equity,\u00a0malls, and warehouses<\/strong>.”\u00a0<\/p>\n

<\/a><\/p>\n

The journalist penned the note titled\u00a0“The CRE Crash Is Part of the Price of Global Quantitative Easing”<\/em>\u00a0following the latest CRE rumblings with loan losses, reserve build, and dividend cuts announced by\u00a0New York Community Bancorp<\/a>, a regional bank with high exposure to multifamily and CRE lending across NYC. Also, sizable credit losses and\/or write-downs of US CRE sparked\u00a0chaos for lenders in Japan<\/a>,\u00a0Germany, and Canada as the dominoes<\/a>\u00a0began to fall.\u00a0<\/p>\n

Furthermore, Callanan referenced a National Bureau of Economic Research report revealing that 45% of all office loans are underwater. This report also cautioned that upwards of 300 regional banks could face solvency runs due to CRE turmoil at the end of the third quarter.\u00a0<\/p>\n

In a report last week, research firm Green Street estimated that appraised property values could sustain another 10% to reach fair valuations, which is bad news for lenders, particularly smaller ones with weak balance sheets.\u00a0<\/p>\n

X user\u00a0Triple Net Investor<\/em><\/a>\u00a0posted the latest CRE catastrophe: “A 262k sq ft building in Ohio has just sold for $2.4 million, or $9 per sq ft.”\u00a0<\/p>\n

X user said, “Yes, that’s not a typo – it literally sold for $9 per sq ft.”\u00a0<\/p>\n

“The commercial real estate ‘correction’ has gone from concerning to an outright apocalypse, primarily impacting office properties in most cities across the US,” the user explained.\u00a0<\/p>\n

A 262k sq ft building in Ohio has just sold for $2.4 million, or $9 per sq ft<\/p>\n

Yes that’s not a typo – it literally sold for $9 per sq ft<\/p>\n

It was the former site of FedEx Custom Critical in Green, Ohio<\/p>\n

The commercial real estate ‘correction’ has gone from concerning to an\u2026 pic.twitter.com\/8yJMTg09Nc<\/a><\/p>\n

\u2014 Triple Net Investor (@TripleNetInvest) February 9, 2024<\/a><\/p>\n

Barry Sternlicht, chairman and CEO of Starwood Capital, warned last summer that the CRE storm is entering “Category 5 hurricane<\/a>” strength. He recently gave his take on the situation:<\/p>\n

“The office market has an existential crisis right now… it’s a $3 trillion dollar asset class that’s probably worth $1.8 trillion [now].”\u00a0<\/em><\/p>\n

Barry Sternlicht just gave a VERY thoughtful interview about the growing troubles in commercial real estate:<\/p>\n

Here’s what he had to say:<\/p>\n

“We have a problem in real estate. In every sector of real estate, not just office, because of the 500 basis point increase in rates that was\u2026 pic.twitter.com\/OZdrpxxBtq<\/a><\/p>\n

\u2014 Triple Net Investor (@TripleNetInvest) February 1, 2024<\/a><\/p>\n

So, what’s ahead for the office market?\u00a0<\/p>\n

Well, more turmoil: Analysts led by Morgan Stanley’s Ronald Kamdem warned the most significant headwinds for Class A and Class B\/C is years of supply, well above pre-Covid levels.\u00a0<\/p>\n

<\/a><\/p>\n

Class A office has about 18 years of supply, compared with the 2015-19 average of 13 years.\u00a0<\/p>\n

<\/a><\/p>\n

“The supply risk picture at the national level remains concerning and implies vacancy rates will likely remain under pressure,” Kamdem wrote.\u00a0<\/p>\n

And what happens if these buildings can’t find tenants and office owners can’t find financing?<\/p>\n

Well, as Vishwanath Tirupattur, global head of Quantitative Research at Morgan Stanley,\u00a0warned<\/a>\u00a0in a note days ago: The CRE crisis will be with us for a long time.\u00a0<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nMon, 02\/12\/2024 – 19:30<\/span><\/p>\n

\u200bRead More<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

CRE Crash Unfolding: “Yes That’s Not A Typo – It Literally Sold For $9 Per SQFT”\u00a0 In a commentary, Neil Callanan of Bloomberg highlighted, “The\u00a0commercial…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-1456993","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbimBl-671T","jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1456993","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1456993"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1456993\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1456993"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1456993"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1456993"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}