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Everyone can see the slow-motion train wreck that is unfolding right in front of our eyes, but nobody has a plan to stop it. Unfortunately, from a short-term perspective I don’t know if there is anything that can be done to prevent the commercial real estate bubble from imploding. Vacancy rates are surging to historic highs all over the nation, and without sufficient rental income many property owners will be forced to default.
In addition, a giant mountain of commercial real estate mortgages will be up for refinancing over the next few years, and substantially higher interest rates will make refinancing those mortgages exceedingly difficult. We really are facing a “perfect storm” for the commercial real estate industry, and the fallout is going to be absolutely devastating for U.S. banks.
This is not a small problem. Offices are sitting empty from coast to coast, and the total commercial real estate market in this country is currently valued at somewhere around 20 trillion dollars…
From Dallas and Minneapolis to New York and Los Angeles, offices sit vacant or underused, showing the staying power of the work-from-home era. But clear desks and quiet break rooms aren’t just a headache for bosses eager to gather teams in person.
Investors and regulators, on high alert for signs of trouble in the financial system following recent bank failures, are now homing in on the downturn in the $20 trillion US commercial real estate market.
The pandemic sparked a “remote work” revolution, and now we have a lot of office space that is simply not needed any longer.
In fact, office vacancies in Manhattan are now at the highest level ever recorded…
In New York’s Manhattan, office vacancies are at a record high, Bloomberg reported last week, even as new properties come online, adding even more space to the struggling market. And in Los Angeles and Chicago, office vacancies sat at 22.5% as of the fourth quarter of 2022.
This is a huge problem for property owners, because many of them don’t have enough tenants paying rent.
And as I mentioned earlier, an enormous pile of commercial mortgages “will be up for refinancing in the next couple of years”…
They are a bellwether for what is likely to come, as more than half of the $2.9 trillion in commercial mortgages will be up for refinancing in the next couple of years, according to Morgan Stanley.
“Even if current rates stay where they are, new lending rates are likely to be 3.5 to 4.5 percentage points higher than they are for many of CRE’s existing mortgages,” wrote Morgan Stanley Chief Investment Officer Lisa Shalett, in a recent report.
In the end, we are going to see an unprecedented wave of defaults and commercial property prices are going to crash really hard.
As I noted yesterday, Morgan Stanley is actually warning that commercial property prices “could fall as much as 40%”…
With small- and medium-size banks accounting for 80% of commercial real estate lending, the situation might soon get worse, says experts.
Commercial property prices could fall as much as 40% “rivaling the decline during the 2008 financial crisis,” forecast Morgan Stanley analysts.
Actually, I believe that projection is probably too optimistic.
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At this point, commercial property prices are already down 15 percent from the peak of the market…
Prices in the United States were down 15% in March from their recent peak, according to data provider Green Street. The rapid increase in interest rates over the past year has been painful, since purchases of commercial buildings are typically financed with large loans.
In some markets, the carnage that we have already seen is quite breathtaking. For example, Blackstone recently sold two office towers in southern California at a 36 percent loss…
Private equity firm Blackstone sold two 13-story Class A office towers, the Griffin Towers, in Santa Ana, Orange County, California, for $82 million to a joint venture between Barker Pacific Group and Kingsbarn Realty Capital. The towers, built in 1987, have a vacancy rate of 24%.
Blackstone had bought the towers in 2014 for $129 million, according to the Commercial Observer yesterday. The selling price makes for a loss of 36%. And Blackstone was lucky on this deal.
And an office tower in Houston just sold at a loss of 47 percent…
In Houston, Parkway Property sold the 960,000-sf San Felipe Plaza in Uptown, to Sovereign Partners for $82.8 million in late March. The tower was built in 1984. Parkway Property ended up with the tower when it acquired Thomas Properties, which had bought the property in 2005 for $156.5 million. So this was a loss of 47%.
I don’t know why anyone would be willing to purchase commercial real estate at this stage.
Trying to catch a falling knife is a very dangerous thing. Of course commercial real estate is not the only bubble that is bursting.
We have already seen the crypto bubble burst, we have seen the bond bubble burst, and residential real estate prices are starting to fall all over the nation.
So far, stock prices are hanging in there, but a number of experts are warning that a big crash is just around the corner…
Legendary investor Jeremy Grantham has topped the board for an extreme prediction about US stocks. The market historian has forecasted the S&P 500 could tank as much as 50% this year to about 2,000, as an “everything bubble” bursts.
Grantham said the prices of stocks, bonds, real estate, fine art, and other investments surged to unsustainable highs during the COVID-19 pandemic.
Market experts Stephanie Pomboy and Larry McDonald echoed Grantham’s view – but with a less bearish prediction. While the pair expect stocks to crash as much as 30%, McDonald said the plunge could happen over the next two months as higher interest rates choke demand.
Our leaders were able to artificially prop up the system for a number of years, but now they have lost control.
A great financial earthquake has begun, and things are going to get really bad during the years that are in front of us.
But many people out there truly believed that the party would last forever, and so now they are in a position to get very badly burned as the system melts down all around them.
Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here.
About the Author: My name is Michael and my brand new book entitled “End Times” is now available on Amazon.com. In addition to my new book I have written six other books that are available on Amazon.com including “7 Year Apocalypse”, “Lost Prophecies Of The Future Of America”, “The Beginning Of The End”, and “Living A Life That Really Matters”. (#CommissionsEarned) When you purchase any of these books you help to support the work that I am doing, and one way that you can really help is by sending copies as gifts to family and friends. Time is short, and I need help getting these warnings into the hands of as many people as possible. I have also started a brand new Substack newsletter, and I encourage you to subscribe so that you won’t miss any of the latest updates.
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Article cross-posted from The Economic Collapse Blog.
Diddy Charges and Arrest Beg the Question: What Other Elite Hollywood Celebs Knew About ‘Freak Offs?’
by Outkick
Puff Daddy is finally facing the mother of all karma for his alleged sick and twisted behavior spanning a decade or more. At yesterday’s press conference, reporters asked the attorney why it took so long to get these charges and that’s a great question. Fs Sot 3 (5) Here’s another…
Is This Kamala’s Biggest Lie About Her Family Yet?
by Natural News
U.S. Vice President Kamala Harris has falsely claimed that her grandfather was a freedom fighter in the Indian independence movement. The Democratic presidential nominee shared on Sept. 8 a picture of herself in India with her maternal grandfather P.V. Gopalan. She described him as a “retired civil servant who had…
What Did John Brennan Know?
by Frontpage Mag
In the wake of the second attempt on his life, Donald Trump flagged the “highly inflammatory language” Democrats have deployed against him, such as the charges of Joe Biden and Kamala Harris that the former president is a threat to democracy and so forth. When it comes to inflammatory language…
Are the White House and Pentagon Controlled by a Shadowy Few?
by Zero Hedge
As we approach the 2024 election, many Americans are disillusioned by the notion that their votes truly matter. Why? Because there’s a growing belief that a hidden force – often referred to as the Deep or Administrative State – wields disproportionate power behind the scenes. Despite our democratic process, can…
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Do We Have Another Instance Where the Secret Service Can’t Get Its Story Right?
by Townhall
Former President Donald Trump was nearly assassinated on September 15 while golfing in West Palm Beach. The former president’s trip to Trump International Golf Club was not planned, but would-be assassin Ryan Wesley Routh was waiting on the course, hiding in a shrubbery for 12 hours with a rifle and…
City Demands Pastor Take Down ‘Jesus’ Sign in Front of Church, Gets Epic Response From Him During Sermon
by Western Journal
Freedom-loving Americans cannot help but bemoan the mounting authoritarianism of both federal and state officials. As we discovered during the COVID era, however, sometimes Satan infects even our neighbors with the spirit of petty tyranny. In a clip posted Tuesday to the social media platform X, Pastor Mark Driscoll of…
Leftists Deserve the J6 Treatment
by J.B. Shurk
Remember: illegally appointed special counsel Jack Smith is prosecuting President Trump in D.C. for exercising his constitutional right to free speech after the 2020 election. Smith’s case essentially claims that Trump was not entitled to question the legitimacy of the mail-in ballot–tainted election and that his refusal to concede to Joe Biden…
Professor Teaches Students About Evil by Having Them Read Writings of Hitler’s Chief Propagandist
by Red State
A professor at the University of Austin ingeniously teaches students about “good and evil” by having them read the writings of some of the 20th century’s most evil people, including Adolf Hitler’s chief propagandist, Joseph Goebbels. Spoiler: I think it’s absolutely brilliant. Professor Marietta, who says Goebbels used “emotional appeal”…
Bombshell Lab Findings: Covid Jab Spike Proteins Likely Accelerate Cancer, Neurological Disorders, Dementia, Crohn’s, Lyme and More
by S.D. Wells, Natural News
(Natural News)—Back in February, U.S. Republican Senator Ron Johnson from Wisconsin held a roundtable discussion titled ‘Federal Health Agencies and the COVID Cartel: What Are They Hiding?’. In attendance at that forum was an internal medicine specialist and medical doctor named Sabine Hazan, who conducts and supervises clinical trials for cutting-edge…
Fan in MAGA Hat Denied Entry at Arizona Cardinals’ Home Stadium Unless She Threw It Away, Prompting Apology From Team
by The Blaze
The Arizona Cardinals organization has issued an apology after a fan was initially denied entry to the team’s home opener because she was wearing a Make America Great Again hat in support of the presidential candidacy of former President Donald Trump. On Sunday, thousands of football fans flocked to State…
New Report: State Department Funded Fact-Checkers to Censor ‘Lawful Speech’
by Michael Nevradakis Ph.D., The Defender
(The Defender)—The U.S. Department of State-funded domestic and international fact-checking entities that censored American independent media outlets and social media users who questioned the Biden administration’s COVID-19 and other policies, according to a congressional report. The report by the U.S. House of Representatives Committee on Small Business stated: “The Federal…
Springfield City Manager Admitted in March He’d ‘Heard’ About Haitian Migrants Eating ‘Domesticated Animals’
by The Post Millennial
A video from the Springfield City Commission meeting in March has resurfaced on Twitter, showing the Springfield, Ohio, City Manager Bryan Heck admitting that he had heard stories about Haitian immigrants to the town consuming “domesticated animals.” A resident of Springfield spoke to at the meeting and the City Manager,…
Did the Government Shield Diddy Like Epstein?
by Daily Wire
Some of the most revealing moments from the sordid saga of Jeffrey Epstein came when government officials were asked direct questions, then ducked them without any real explanation. Case in point: Five years ago, the Labor Secretary at the time, Alex Acosta, was speaking to reporters about his handling of…
Saudi Arabia Won’t Recognize Israel Without Palestinian State, Says Crown Prince
by End Times Headlines
Saudi Crown Prince Mohammed bin Salman on Wednesday said the kingdom would not recognize Israel without a Palestinian state and strongly condemned the “crimes of the Israeli occupation” against the Palestinian people. “The kingdom will not stop its tireless work towards the establishment of an independent Palestinian state with East…
Retired Border Patrol Chief Accuses Joe Biden, Kamala Harris of Attempting to Hide Mass Release of Migrants Into U.S.
by Breitbart
Retired Border Patrol Chief Aaron Heitke, who left his position at the Department of Homeland Security (DHS) in early 2023, says President Joe Biden and Vice President Kamala Harris’s administration has worked to hide the mass release of migrants into American communities. During a House Homeland Security Committee hearing on…
Less Than 50 Days Until Life in America Changes Forever, and Our Nation Is Primed for Massive Civil Unrest
by Michael Snyder
(The Economic Collapse Blog)—Years of extremely inflammatory rhetoric from the mainstream media and from many of our leaders have brought us to the brink of a societal nightmare. The numbers that I am about to share with you are horrifying, but it is so important for us to understand what…