Four big defaults in U.S. commercial real estate in less than a month

In this video above, "Nobody Special" cites reports of Google asking workers to share desks to increase "office efficiency," for those coming in to the office two days a week.  

Google getting Monday/Wednesday workers to share desks with Tuesday/Thursday office workers is not earth shattering news in today's world.  But our host above follows this up by reporting on a $1.7 billion commercial loan default Columbia Property Trust, a Pimco owned company.  He follows that with a story on defaults on two more loans on downtown L.A. buildings by Brookfield Properties.  Those defaults on the Gas Company Tower and 777 South Figueroa Street, both in downtown L.A., added up to $784 million defaulted on, according to this report.  That's nearly $2.5 billion in defaults on large building financing, in under three weeks.  The properties are located in San Francisco, New York, Jersey City, and Los Angeles.  This report is from late February.

Following the report above, on March 3rd, I believe, came another default report.  This one, explained here on Bloomberg TV, tells that Blackstone defaulted on $567 million commercial mortgage backed securities CMBS), on office properties in Finland.  First of all, this is Blackstone, alluded to by some as the "evil empire," and one of thhe most powerful and well connected businesses in the world.  In the news segment linked, it's explained that the offices financed by these securites were averaging about 45% occupancy.  Low occupancy rates due to work-from-home and other issues, combined with rapidly rising interest rates, and the use of "flotaing rate debt" to finance these buildings, is turning regular refinancing into crises.  As these short term financing securities come up for refinancing, the higher interest rates are often tripling monthly payments for property owners, leading to major decisions on what action to take next.  

Obviously, because floating rate debt has been a popular way to finance large buildings in the recent low interest rate environment years, other companies will have much higher payments, as the time to refi comes up.  Will we see more, similar, large defaults?  Or will this be a short spike, an outlier?  Time will tell.  

Will 2023 see a comercial real estate apocalypse?

Is this the end for commerical real estate?  Or even civilization itself?  Do we all need to go build crazy rat rods and dress in black leather like in the original Mad Max movie?  No I don't think so.  But there's a lot more change, and more crazy times ahead, in my opinion.  This video did give me the idea for this blog, though.  

I'm a blogger, one of the millions of bloggers that toss their personal thoughts and ideas out here on the interwebs.  I'm not a professional blogger, I don't make a living blogging, but I have been at it for over 14 years now, and my top few blogs have pulled in over 300,000 pageviews.  So some people check out my ideas at times.  

I've been an amateur futurist, and and economics geek, much of my life.  Since I was a kid, I've tried to figure out where things were headed, where society itself was going.  As a Gen X kid in the 1970's, life moved really slow, compared to our current world.  Change was a slow, gradual process back then, major changes took years.  Over the 45 years since, I've run into a few theories of long term trends and cycles that have helped me get a better picture of where the future is likely to take us.  During that time, as us older folks know, things began changing at most every level, and the rate of change keeps getting faster and faster.  

I've been blogging about the current recession that we seem to be heading into, in posts like this and this, since 2019.  By the late 2010's, it became apparent to me that a whole lot of change, and major inflection points in economics and society itself, were coming in the 2020's.  I predicted a major economic downturn would be coming in early 2019, and hinted at it in early 2018.  

But now we are beginning the 4th year of what I call The Tumultuous 2020's, and appear to be heading into a seriously deep and gnarly recession.  Not what?  

The idea of finding new uses for old, abandoned, or unused buildings, has fascinated me for more than a decade.  I wound up in central North Carolina during the Great Recession, a place I'd never lived before.  The only job I could find there was driving a taxi.  Day after day I drove past the old, crumbling textile and furniture factory buildings, imagining what could be done to revive them.  I often sat in front of an abandoned warehouse building, alone in my taxi, dreaming of building a bike and skate park in it, something like Ray's MTB in Cleveland.  While I never got any of those ideas off the ground, the rehabilitation of unused and abandoned buildings is something I still think about.  I believe it will be a major part of the change in this decade, a continuing period of extensive change throughout society.  

I went looking for the blogs and YouTube channels about adaptive reuse of commercial buildings, just out of curiosity, and found there weren't any.  There are several scholarly articles, a few business articles, and a number of videos.  But no one has brought these ideas together in one place.  So I decided to do it.  We'll see where this all goes.  As real estate, housing and commercial, crashes in many parts of the U.S. in 2023, this is a trend that will definitely grow in the coming years, once business people find new ideas and banks feel safe funding commercial real estate again.  

There's a lot to dig into in this area, and lots of new ideas are needed.  I like to dig into weird stuff like this, and I'm an idea guy.  So here we go, hopefully some of you will find good posts in this blog, and related content as it heads forward.  All aboard!  Let's see where this idea will go...

Here's my new Adaptive Reuse Pinterest board