3 ms·
Commercial real estate is going to be really interesting to watch. For a lot of mid-size companies, the building lease is 15% of your total operating expenses.
by wnmurphy 6y ago
Commercial real estate is going to be really interesting to watch. For a lot of mid-size companies, the building lease is 15% of your total operating expenses.
- jiveturkey 6y agoEspecially in CA, where it's propped up by umm prop 13! Every default should trigger a re-assessment when the property changes hands. CA recently put into place a rule (law?) where a change of control of the ownership entity also triggers re-assessment, thereby ending the long running scheme of selling the LLC owner rather than the property itself. If enough of these bad (metric-wise) loans default, there could be a very far reaching negative valuation impact, ie well beyond just the defaulted properties. I expect rents will go up, even as property values go down.