Downtowns in most cities haven't recovered anywhere near sustainable levels, but rents are still being paid on many office tower floors. By the end of next year, most of those leases will be done, and nearly everyone is downsizing.
This is incorrect. Standard leases are for 5 years so 20% would come due in any given year, but for larger spaces that entailed significant investment by landlord or tenant tend to be for 10 years and some as long as 20.
This is in Berlin btw. There are still new office buildings being built right now. I'd say, a lot of those projects are going to have some financial challenges. A lot of that construction was planned and financed before covid and the construction work just seems to go ahead here on automatic pilot.
One of the bigger fiasco's in Berlin on this front is a new sky scraper on the Alexander Platz (near the famous big tv tower) that was supposed to become the tallest building in Berlin (except for that tv tower). They have been working on the foundations for this for some time. But since the financial backers of this were Russian, it is doubtful the project will ever be completed and there seems to be not a lot happening on that project recently. And even if it is built, there is already plenty of available office space in existing buildings. https://berlinspectator.com/2022/07/25/berlin-alexander-towe...
There is of course a housing shortage. I'd say a lot of the empty offices are going to eventually be converted for housing. But not before there is a little real estate massacre for current building owners and investors. Office rents should be trending down at this point.
Is this true? What's the average lease length in an office tower?