Based on this tenant space listing [0] the building appears to have around 40k sq ft of leasable space. That works out to around 3.25 years of rent assuming 40k sq ft leasable at $32/sq ft.
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.
My comment about 5% 30 year Treasury bonds being more attractive than mid tier office buildings financed at 8% was referring to someone making a current investment decision.
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.
Except outside America where it’s metric… also as someone who’s gone hunting for commercial space before, it’s kinda only 97% true that it’s always per year… there’s an irritating countercurrent of people that try and trick you into thinking something overpriced is a bargain by quoting the inflated prices at 1/12th the cost because that’s the monthly not the yearly, and people who just deliberately want to game various “by lowest price” sorting mechanisms on property listings websites.
That is not the monthly lease rate. All commercial property lease rates are quoted as dollars per square foot per year.