> The monthly rent for Class B in 2022 was $32-38/ft2.
That is not the monthly lease rate. All commercial property lease rates are quoted as dollars per square foot per year.
That is not the monthly lease rate. All commercial property lease rates are quoted as dollars per square foot per year.
It’s definitely not a good sign for commercial office space, that’s for sure.
US 30 year bonds are yielding 5%, that’s much more attractive than a half-leased Class B office tower with an 8% mortgage right now.
[0] https://bradvisors.com/wp-content/uploads/2019/04/33-41WestS...
P.S. Sorry about the nitpicking :)
https://archive.ph/ku9Xr | https://www.bloomberg.com/news/articles/2023-04-08/a-1-5-tri...
The refinancing of $1.5T in CRE before 2025 is going to be a bloodbath for regional banks, hopefully we don’t have multiple SVB situations as a result.
For anyone unfamiliar with CRE financing, a typical loan might have a term of 5-10 years and an amortization schedule of 20-30 years. A lot of loans that were taken out when the prime rate was 0-2% are now going to have to be refinanced when the prime rate is 5.25% and occupancy rates have dropped, meaning the building is worth less than it was previously and also the monthly payments are higher as a result of the higher interest rates. Lots of building owners are going to walk away and the banks will have to repossess and resell a bunch of CRE.