Real Estate Attorneys Predicting Wave of Office Defaults

Bisnow 5/12/21, I was surprised  by the following quote: “Real estate attorneys surveyed by Bloomberg Law are almost all predicting defaults in retail and hospitality properties in 2021, but they also predict that office properties will see a large share of defaults this year. Ninety-four percent of the respondents picked retail as one of the top three property types at risk of default this year, according to the company’s 2021 Commercial Real Estate Bankruptcy Survey. Hospitality was the choice of 79% surveyed as one of the top three, while an equal percentage also picked office…Cancellation of office leases and potential vacancies caused by permanent moves to remote work might be behind this choice.”  This was surprising to me as there have been a number of high-priced office building sales in San Francisco, Silicon Valley, and elsewhere, in spite of high amounts of sublease space and companies announcing hybrid or full work-from-home programs. Bloomberg Law also reported that through March, 2021 less than one percent of office-associated loans were more than 90 days delinquent.