Spent its entire life burning $13.8 billion of investor cash. Landlords got free manna from heaven and can’t complain. A good scheme while it lasted for everyone but investors.
A black swan of sorts no one was ready for: Negative interest rates turned positive, and all heck broke loose in the property development sector.
Fundamentals boiled down to QE or QT since 2009. Now there’s lots of QT, globally, to battle the worst inflation in decades.
Availability rate in Q3 spiked to 36% in San Francisco. Sublease space nearly doubled in Silicon Valley. Leasing activity collapsed. More landlords default.
Lodging is Bad, Multifamily hangs in there, Industrial remains unscathed.
Fundamentals for markets have boiled down to QE or QT since 2009. Now there’s QT, a lot of QT, globally, to battle the worst inflation in decades.
CRE debt keeps on giving. Retail CMBS have been a bloodbath for years. Thankfully, banks largely not on the hook.
Unlike the defaults during the Financial Crisis, this default cycle is structural, in addition to being financial.
Some asset classes, notably industrial and self-storage, have scarcely declined at all. Others, having flown too close to the sun, have plunged into the sea.
CMBS holders are on the hook, not banks. Investors in hotel REITs have gotten totally crushed.