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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

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. [0] https://bradvisors.com/wp-content/uploads/2019/04/33-41WestSt_Brochure040419_lo-.pdf https://bradvisors.com/wp-content/uploads/2019/04/33-41WestS... P.S. Sorry about the nitpicking :)

toomuchtodo 3y ago
Consider that a lot of these mortgages are not yet at 8%. There is about $1.5T in commercial debt coming due before 2025. https://archive.ph/ku9Xr https://archive.ph/ku9Xr | https://www.bloomberg.com/news/articles/2023-04-08/a-1-5-trillion-wall-of-debt-is-looming-for-us-commercial-properties https://www.bloomberg.com/news/articles/2023-04-08/a-1-5-tri...
- quickthrowman 3y ago
  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.
  - toomuchtodo 3y ago
    Apologies for talking past each other. Agree with your analysis.

toomuchtodo 3y ago

Consider that a lot of these mortgages are not yet at 8%. There is about $1.5T in commercial debt coming due before 2025. https://archive.ph/ku9Xr https://archive.ph/ku9Xr | https://www.bloomberg.com/news/articles/2023-04-08/a-1-5-trillion-wall-of-debt-is-looming-for-us-commercial-properties https://www.bloomberg.com/news/articles/2023-04-08/a-1-5-tri...

quickthrowman 3y ago
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.
- toomuchtodo 3y ago
  Apologies for talking past each other. Agree with your analysis.