The Commercial Real Estate Collapse Is Driving Fire Sales of Major Office Buildings
Aug. 13, 2023, 2022 (EIRNS)—Zero Hedge provides a survey of the collapse of San Francisco’s business district as a paradigm of the commercial real estate collapse nationwide. They focus on San Francisco, where the “exodus of businesses and residents” from the downtown area is characterized by the sale of formerly booming offices, now largely empty due to the “stay at home” policies during the pandemic and the general economic crisis, are being sold at a fraction of their former worth. They note that this also reflects the degeneration of the streets in the region: “The crime-ridden metro area covered in poop must come to terms with City Hall’s horrendous progressive policies that have entirely backfired and led to an exodus of businesses and people. Until Mayor London Breed can instill law and order once more—the ability for the downtown area to thrive once more will remain challenging.”
The examples they give are revealing:
“An 11-story building that is 30% occupied and is expected to be entirely vacant by summer 2025, has been sold ... for $40.9 million, about a 66% discount versus the most recent assessed property value of $121 million...; The offices at 350 California St. reportedly sold for roughly 75% less than its previously estimated value in May, and the 22-story Financial District edifice mostly sits empty. Just a few weeks later, nearby 550 California changed hands for less than half of what owner Wells Fargo paid for the building in 2005.”
They note that the next shoe to drop will be the small banks which are a main source of funding for these office buildings.