The Longest Commercial Real Estate ‘Transition’ in Fifty Years
This is just my opinion and I finish my 50th year specializing in the leasing and selling of Eastbay commercial real estate. I’ve been through a number of transitions, when the market either goes up or down, and I still remember in my early days when the office vacancy rate in San Francisco was less than 1%, and today it is around 30%. The office market in many regions has been struggling ever since Covid allowed workers to not have to come into the office, and despite corporate mandates many are still working from home. At least here in the San Francisco Bay Area we have seen dozens, maybe hundreds, of office buildings get foreclosed or had their loans severely discounted and then valued at 25-30% of what the value had been pre-Covid. Back when I worked at Grubb & Ellis in downtown Oakland my office at one point was in the Clorox building at 1221 Broadway. It was a beautiful Class A high-rise office building situated directly over a Bart station. This past week the 535,000 square foot property went through a deed in leu of foreclosure proceeding where title went from KKR and TMG, the former owners, to Heitman Capital. Another example of how our market is still bouncing around the bottom, and it has been this way for too many years…I wish I could forecast that there is an end in sight, but my gut tells me this may be a case where it could get worse before getting better. Artificial intelligence is the wild card that is allowing corporations to maintain their business level but with a fraction of their staff. This trend is just at its infancy stage…
