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Commercial property deals in the US are starting to pick up at deep discounts

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Re: Commercial property deals in the US are starting to pick up at deep discounts

#141

Post by AnimalMuppet »

xyst wrote: post #91

> The magnitude of the crisis is up for debate. Treasury Secretary Janet Yellen said last week that losses in commercial real estate are a worry, but that the situation is “manageable,” a similar sentiment expressed by Fed Chair Jerome Powell in a 60 Minutes interview on Feb. 4. Others have more dire outlooks, with real estate investor Barry Sternlicht predicting $1 trillion in office losses. Fuck man. Another ‘08 si…

How big were the losses in '08?

And, it's not just the total magnitude of the losses. Who takes them and how they take them makes a big difference. Hopefully there's nothing pseudo-bank-like waiting in the weeds (like the repo market or reverse repo or whatever it was) that can make this blow up into a bank-panic-like situation...

Re: Commercial property deals in the US are starting to pick up at deep discounts

#142

Post by le-mark »

xyst wrote: post #91

> The magnitude of the crisis is up for debate. Treasury Secretary Janet Yellen said last week that losses in commercial real estate are a worry, but that the situation is “manageable,” a similar sentiment expressed by Fed Chair Jerome Powell in a 60 Minutes interview on Feb. 4. Others have more dire outlooks, with real estate investor Barry Sternlicht predicting $1 trillion in office losses. Fuck man. Another ‘08 si…

There was a mania around residential real estate, adjustable rate mortgages, swaps, cdos and synthetic cdos, that all hinged on adjustable rates resetting up starting in 2007 that drove the 2008 crises. The movie “The Big Short” does a good job explaining it for us laymen imo.

Re: Commercial property deals in the US are starting to pick up at deep discounts

#143

Post by rchaud »

infecto wrote: post #126
xyst wrote: post #91

> The magnitude of the crisis is up for debate. Treasury Secretary Janet Yellen said last week that losses in commercial real estate are a worry, but that the situation is “manageable,” a similar sentiment expressed by Fed Chair Jerome Powell in a 60 Minutes interview on Feb. 4. Others have more dire outlooks, with real estate investor Barry Sternlicht predicting $1 trillion in office losses. Fuck man. Another ‘08 si…

Hard to trust a talking head investor who is just advancing his position/holdings.

Precisely. Reminds me of the well-to-do investors going on Twitter in March '23 screaming for the Fed to exempt them from the $250k FDIC limits when Silicon Valley Bank failed.

Re: Commercial property deals in the US are starting to pick up at deep discounts

#144

Post by infecto »

cm2187 wrote: post #135
infecto wrote: post #124

Earlier quoted context omitted.

I might be mistaken but I thought it was the inverse. REITs that trade on the public market would have pricing that reflects the market opinion regardless of how the books are marked. The issue in general with RE is that you would be marking your books based on comps and the mark downs will lag the market. Not investment advice but sometime in the past year to now is when you would want to be investing in publicly tr…

Surely at one point someone has to invest into the fund, you can't just buy shares on the secondary market otherwise how do they fund assets? For ETFs, market makers are liaising with the issuer to issue and redeem as the demand fluctuates. But that only works for liquid underlying assets.

I think that is conflating the ETF and the underlying REIT.

The REIT has a float that is going to be similar to any other publicly listed company. The market is setting the price and underlying value of the REIT. The ETF which has a basket of those REITS, will include authorized participants that are creating and redeeming shares based on the underlying REITS. Are there any REIT ETFs with basket holdings including non-traded assets? I am not sure but I don't know of any.

So the ETF is indeed redeeming/creating based on market supply/demand but its of an underlying public traded REIT.

Re: Commercial property deals in the US are starting to pick up at deep discounts

#145

Post by thuuuomas »

zbrozek wrote: post #23
keiferski wrote: post #15

Only speaking from my personal travel experiences, not any hard data, but: I feel like this issue is nearly non-existent in places with mixed use zoning. If the office values go down in a place with equal amounts of housing, they are repurposed as new apartments. The problem is when the office architecture isn’t interchangeable with apartment architecture, which usually happens because certain areas are zoned as offi…

Some local councils around here want to make it a condition of approval that the first floor of mixed-use must remain commercial. Developers want it to be flexible because they can't predict future need. Constraints cost! Euclidean zoning is an unspeakably expensive economic blunder.

I love to live within smelling distance of the urban slaughterhouse. I love not knowing what chemicals may be wafting out of tanks buried, forgotten beneath my brownfield luxury condo.

Re: Commercial property deals in the US are starting to pick up at deep discounts

#146

Post by from-nibly »

le-mark wrote: post #140
chiefalchemist wrote: post #130

Earlier quoted context omitted.

If only they (read: banks and local govs) had financed the construction of more residential, and less commercial the system would be more in balance. As it is, there's a lack of residential supply, and an over supply of commercial. That said, the Fed's addiction to cheap money and other tricks to keep the economy propped up didn't help either.And now we're in a muck and paying for their missteps.

Lowering inflation, strong gdp, and strong jobs growth seems to indicate they’re doing something right. Or did I miss the point (I don’t watch fox)?

Good for you for not watching the red version of the propaganda?

Re: Commercial property deals in the US are starting to pick up at deep discounts

#147

Post by danaris »

chollida1 wrote: post #120
keiferski wrote: post #15

Only speaking from my personal travel experiences, not any hard data, but: I feel like this issue is nearly non-existent in places with mixed use zoning. If the office values go down in a place with equal amounts of housing, they are repurposed as new apartments. The problem is when the office architecture isn’t interchangeable with apartment architecture, which usually happens because certain areas are zoned as offi…

THis is a nice thought but rarely happens regardless of zoning. Office buildings floor plates and residential floor plates aren't really compatable. Office buildings have most of their floor plates not around windows, where are residential needs some light. Also water, and sewer need to be retrofitted. The one building that was a successful conversion that I know of cut out the center of the building to create a ligh…

There is an actual solution, at least for buildings that are large enough:

Make the whole building mixed-use. Ring the outside with apartments, and keep the inside commercial. Make the whole thing a little community in itself.

Just fill the whole center of it with cafés, bodegas, computer repair shops—the kinds of small, locally-owned shops you get in a (healthy) small town or a pre-modern-zoning city area.

Re: Commercial property deals in the US are starting to pick up at deep discounts

#148

Post by gedy »

nox101 wrote: post #49
Nursie wrote: post #10

Interesting, but predictable. The clamouring for "return to the office" was always a minority voice, and it seemed to be two major classes of people doing the clamouring - old fashioned managers who didn't believe staff could produce while at home, and those who made their living from forced commutes - a broad class of building owners and ancillary business owners such as meal providers. The ancillary businesses I ha…

I'm probably wrong, but I feel like in the style of city that urban advocates like "No Just Bikes" advocate for, there would be lots more "ancillary business owners such as meal providers" because the cities would be designed to be walkable and so instead of driving 3-4 miles to the nearest big box car lot you'd walk 1/2 a mile to your local "pedestrian and bicycle only shopping street" with a bunch of small shops, r…

> Most of "car infested suburbia" is void of "ancillary business owners" because it's just miles and miles of tract homes

Well because until recently, you couldn't work there in suburbia.

It feels like the "suburban office campus" fell out of vogue in like the 60s-70s

Re: Commercial property deals in the US are starting to pick up at deep discounts

#149

Post by danaris »

hackerlight wrote: post #55
CamperBob2 wrote: post #38

Earlier quoted context omitted.

No, modern urban planners basically want us all (except for them, of course) living in a modern Kowloon.

It's the opposite. Urban planners have a vested interest in zoning because their career relies on it. Also, the existence of Kowloon is a good thing. The people who live there would have worse lives if Kowloon was never allowed to build like that. They would be forced to live further away from their work, subjecting them to an hour a day on a cramped train, for example. The wrong question: "Is X bad?". The right ques…

> The wrong question: "Is X bad?". The right question: "Is X worse than the alternative if X wasn't allowed?".

While you're not wrong in many cases, you do have to be careful with making this sort of rubric your universal rule. It can trap you in a local maximum that is vastly inferior to what things could be if you acknowledged that and were willing and able to accept the temporary reduction in quality to move to what is, objectively a better situation.

Re: Commercial property deals in the US are starting to pick up at deep discounts

#150

Post by Workaccount2 »

xyst wrote: post #93
jgilias wrote: post #85

> The plunging US values are being felt around the world because properties in top-tier American cities were once magnets for global investment. Offices were seen as super safe bets backed by high-quality assets with long-term leases and rising rents. Here we go again.

This is why I suspect return to office (RTO) was pushed so hard. The invisible hands pulling the strings behind these MBA flunkies installed at many companies are whispering in their ears. “We need to offload bad debt. Help us keep the con going just a bit longer so we can offload the toxic assets from the books to another firm or government”

I can 100% assure you that bosses and chairmen want to see their landlords get bent just as much as you do. Rent is very expensive, along with maintaining an office.

The idea that RTO is driven by real estate values is so detached and uninformed it's borderline juvenile conspiracy.

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