From San Francisco to Hong Kong, higher interest rates and falling property values are bringing the commercial real estate market to a perilous precipice.
In New York and London, owners of gleaming office towers are walking away from their debt rather than pouring good money after bad. The landlords of downtown San Francisco’s largest mall have abandoned it. A new Hong Kong skyscraper is only a quarter leased.
The creeping rot inside commercial real estate is like a dark seam running through the global economy. Even as stock markets rally and investors are hopeful that the fastest interest-rate increases in a generation will ebb, the trouble in property is set to play out for years.
- Owners of commercial real estate are walking away from their debt rather than investing more money.
- The problem of declining commercial real estate is a major issue in the global economy.
- After a period of sustained growth powered by cheap debt, the issue is set to continue for years to come.
Source (behind paywall):
A couple months ago: Salesforce to exit 30-story namesake tower in Downtown SF
h/t scott_jr