The Great Commercial Real Estate Meltdown Is About To Begin…

[Ingomike]

One Bubble Is About to Pop...and No One Is Talking About It

townhall.com

 

[TrueSeanamus]

One Bubble Is About to Pop...and No One Is Talking About It

townhall.com

There are lots of problems coming at us fast. This actually seems like one of the lesser issues as it mostly only affects land lords and banks. Even worse than this is wages not keeping up with inflation and tons of people having to turn to credit cards to maintain their lifestyles with no real way of being able to pay them back, especially when the interest rates have gone up even more.

Oh, and the whole slow burn on world war three.

All we can really do is watch and hold onto our butts.

 

[Magyars]

There are lots of problems coming at us fast. This actually seems like one of the lesser issues as it mostly only affects land lords and banks. Even worse than this is wages not keeping up with inflation and tons of people having to turn to credit cards to maintain their lifestyles with no real way of being able to pay them back, especially when the interest rates have gone up even more.

Oh, and the whole slow burn on world war three.

All we can really do is watch and hold onto our butts.

All we can do is prepare as best we can....stock up!

 

[rosejm]

mostly only affects land lords and banks.

The key point here: they're using our deposits to leverage their positions. This includes your savings, my 401k, and John's pension. It's also going to smash the budgets of those urban governments, and they've never been good at reduction.

When this house of cards collapses, it's going to snowball. Just as home mortgages were considered extremely safe investments in the 2000's, commercial real estate has been for a very long time. There's a huge pile of debt promised to creditors that depends on occupancy levels. Tax revenue, transportation and daily spending habits are also drying up in these cities. Suddenly you're left with huge swaths of unaffordable, unused blocks of urban decay. Which generate zero dollars.

Does this sound like anything that happened in the last 50 years? (hint: manufacturing exodus 1960-1980)

Unless there's a massive remodeling effort to convert these spaces into something in demand this revenue stream evaporates. In reality, there's probably not enough labor or liquidity to make this transformation fast enough.

You are correct, that it's not the only problem. It may not even be the biggest problem. The current trajectory however points to a very deep hole and the camel is already struggling with its load of straws.

 

[Keith_Indy]

close to pulling the plug on my 401k and buy a business.

At the least a property that I can rent out.

 

[indyjohn]

When those commercial property owners default on their loans, let's talk about who is lining up to buy them at a discounted price!

 

[MCgrease08]

Just more evidence that doing stuff with debt that keeps you leveraged up to your eyeballs is dumb.

My guess is that people who buy commercial properties with cash are still sleeping pretty good at night.

 

[TrueSeanamus]

When those commercial property owners default on their loans, let's talk about who is lining up to buy them at a discounted price!

*cough blackrock cough* and assorted other WEF entities we can only assume.


(I hope emojis work on here or this comment isn’t going to make any sense. Lol)

Edit: the emoji for a rock didn’t work.

 

[Keith_Indy]

Just more evidence that doing stuff with debt that keeps you leveraged up to your eyeballs is dumb.

My guess is that people who buy commercial properties with cash are still sleeping pretty good at night.

Never take on variable interest debt & leverage off that. They are getting hit with inflation & rising interest rates.

Of course, the federal government does it, so why not. “To big to fail”

 

[BigRed]

Spent the last two years tightening the belt and cutting down to the bone.



**** the central state. **** the central planners. **** the centralizers.

 

[Michigan Slim]

Spent the last two years tightening the belt and cutting down to the bone.



**** the central state. **** the central planners. **** the centralizers.

As have we. Everything is paid for except the house, and we could do that with a check. We have been building cash reserves both in and out of the credit union. I invested heavily in steel, brass and lead long ago.

 

[natdscott]

When those commercial property owners default on their loans, let's talk about who is lining up to buy them at a discounted price!

P*** off, @indyjohn. I ain't sellin' you chit at no deescount.

 

[1nderbeard]

commercial RE has been a problem since 2020.

 

[rosejm]

commercial RE has been a problem since 2020.

True, but the leases are longer term. So it's taken this long to start to see those non-renewal rates.

 

[smokingman]

Yesterday

Billionaire Sternlicht Warns CRE Storm Now "Category 5 Hurricane" | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

Today(7/21/2023)

US Bank 'Jog' Is Back - Deposit Outflows Soar Most Since SVB | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

 

[Leadeye]

When those commercial property owners default on their loans, let's talk about who is lining up to buy them at a discounted price!

Somebody with the connections to get the building codes changed so you can rent out commercial real estate the same as residential. The question will be how far they let the value fall before they move in that direction. Big cities need big taxes and when the assessed value of property starts dropping much like New York in the 70s it is hard to collect the same revenue.

I don't think they can afford any major defaults, those things can get out of control. Big money will work out some fix much like Felix Rohatyn did for NYC back in the 70s.

 

[spfldbowhunter]

True, but the leases are longer term. So it's taken this long to start to see those non-renewal rates.

Good point. The regional issues that have been around here and there are about to get noticed nationally.