Bisnow May 23, 2023 headlined a scary article” ‘Persistent’ Remote Work Could Slash Office Values By 44%” and cites a recent study by New York University and Columbia University. “In an update released this month, the authors now project an average value drop of 43.9% from 2019 to 2029. In just a three-year period…Read More→

Tidewater Capital just received approval for a 420,000 sf Oakland CA office tower, so Hope Springs eternal with office developers despite the current and near-term market. At least one regional bank is requiring employees back to the office. AT&T is mandating managers return to the office, and Blackrock is requiring four-days a week in the…Read More→

Artificial intelligence may allow companies to dramatically reduce their workforce. Bisnow May 8, 2023, “IBM CEO Arvind Krishna told Bloomberg that back-office functions like HR would be paused in many cases because the roles can be undertaken by AI. He said the company employed about 26,000 people in noncustomer-facing roles, and about a third of…Read More→

The latest Colliers national office report shows sublease space at a record high, negative net absorption, and overall office vacancy in the United States now at 6.1%. “The gap between asking and effective rents remains significant. Tenant improvement allowances of $100 per square foot or more, accompanied by up to 10 to 18 months of…Read More→

Artificial intelligence in camera-based security may be dramatically changing crime deterrence.  Surveillance cameras are not just motion-detectors but with integrated AI algorithms they can detect intruders and appropriately set off lights, voice warnings, shrieking sirens, and trigger immediate reporting to guards or managers and allowing engagement directly with the intruder over the camera and speakers….Read More→

FacilityExecutive Magazine April 2023 had a sobering prescription for corporate real estate executives faced with excess office space, employees not expected to return to the office, a looming recession and in general no expectations that the vacant space will be occupied anytime soon. “To begin with everything must be on the table: Restack office space,…Read More→

Sobering articles recently that describe the huge discounting of older San Francisco office buildings. One example is 350 California St., 22 stories, 300,000 square feet and built in the 1970’s. In 2020 the value was estimated at $250 million, but now may sell for $60 million!  Another example is 550 California, once priced at $160…Read More→

In an article written by John McNellis, one of the top commercial real estate gurus, and published in the SF Business times April 28, 2023, John lays out the case that at least in San Francisco, office buildings may have lost 60% if their value, compared to just a few years ago before Covid taught…Read More→

Lyft recently mandated that all employees must work in the office Mondays, Wednesdays, and Thursdays, with Tuesdays recommended. They will also be allowed to work remotely one month each year, and those living too far from offices are not required to come in. Many call centers have remote workers, and some have begun to make…Read More→

  According to a recent study by The Instant Group and The Urban Land Institute,  82% of office landlords expect a slight to significant reduction in space utilization over the next five years. Bisnow April 24, 2023 “he survey also found a disconnect between landlords and tenants when it comes to office amenities. Landlords said…Read More→

  We are hearing about more office buildings rumored to be having financial issues. In some cases, there is a mortgage loan coming due and the owner is having trouble refinancing as recently many insurance lenders and banks have made office loans ‘off limits’. It may be that the vacancy of the building has increased…Read More→

Bisnow April 17, 2023 reported that while March 2022 President Biden said ‘in his State of the Union address that the vast majority of federal workers would soon return to the office…that didn’t happen last year, and the process has not always gone smoothly.” There have been federal agencies who mandated that all employees return…Read More→

It is hard to believe that during the past twelve months at one point the price of a share of First Republic Bank stock was $171!  Today it is $13/share!  Before the pandemic San Francisco office buildings were selling for $800-1,200/rsf and considered among the best investments in the world. From the SF Business Times…Read More→

The Colliers U.S. Capital Markets report just out stated that in 2021 there were 10.9 billion in distressed commercial real estate sales, decreasing to $7.9 billion in 2022, and ‘Since 2016, distress has accounted for 1.4% of volume on average. Distress peaked in 2010 at 18.7% of volume. Absolute distress sales peaked in 2011 at…Read More→

David Amsterdam, President of Colliers U.S. Capital Markets put out his latest report.   Year Over Year, Office is down 66%; Industrial is down 52%; Multifamily is down 76%; Retail is up 36%; and Hospitality is down 53%. Unless you have a totally leased office building, credit tenants with terms longer than the loan it…Read More→

SPUR and ULI San Francisco along with Gensler and HR&A Advisors did a study regarding the feasibility of converting office buildings to residential projects. “Because of their physical characteristics, office buildings in San Francisco are stronger candidates for conversion than office buildings in other cities in North America. For projects to be financially feasible, the value…Read More→

The national office vacancy rate is 15.7%, far better than the just-reported 29% vacancy rate for San Francisco. Nationally there is a record 242.7 million square feet of office sublease space available. Compare this with Q4 2019 when there was only 140 million square feet for sublease. According to a recent Colliers U.S. Office Market…Read More→

In an article in Facility Executives February 2023, many commercial building automation systems (BAS) are integrated and efficient, operating the HVAC,  elevators, building security, parking garages, and all the other building elements   but “these systems typically have subpar cybersecurity controls and a large number of vulnerable IoT (Internet of Things) that make them ‘highly vulnerable…and…Read More→

Nicole Goodkind of CNN wrote in an article headlined “Commercial real Estate Is In trouble. Why you should be paying attention”, that office and retail property valuations have been falling sine the pandemic brought about lower occupancy rates and changes where people work and how they shop. The Fed’s efforts to fight inflation by raising…Read More→

Laura Waxman, reporter for the SF Business Times, wrote yesterday that investors who purchased office buildings prior to 2020 paid top dollar. I remember prices of $800-1000 per square foot or more announced back in the good old days before the pandemic hit. “Companies paid top dollar for amenity-rich workplaces designed to keep employees both…Read More→

“Research by the Urban Land Institute and The Instant Group showed that almost all office occupies plan to rethink their property needs…the analysis-Bridging the occupier-landlord gap for the future of workspace-suggested office users are still pondering what activity-based workplaces, flexible working and hybrid working patterns mean. The report’s authors spoke to 285 office occupiers, landlords…Read More→

  SFGATE had an interesting comparison of the retail activity in Downtown Oakland as compared with Downtown San Francisco. Oakland wins hands-down with packed restaurants, crowds of people heading to clubs and concert venues, versus San Francisco’s downtown which is a ghost town. Oakland’s unemployment rate is 3.4%  at the end of 2022, ‘down from…Read More→

Bisnow reportedt that the infection of the recent Silicon Valley Bank failure as also hit the REIT sector, with the U. S. largest REIT, Boston Properties, losing 14% of its value since last Thursday and Alexandria Real Estate Equities, the biggest life scient landlord, losing 12% of its value, according to Bisnow. Several of the…Read More→

    In a recent New York Times article by Emma Goldberg, “Business leaders are in a phase of trial and error that comes with staggering stakes. They are figuring out how many days to call employees back to the office, and on to of that, how strictly to enforce their own rules.”  Office occupancy…Read More→

Salesforce Just Put 125,000 sf of excess office space on the San Francisco market. According to one report I read, this puts the total of Salesforce San Francisco downsizing to one million square feet. Meanwhile its profits are going through the roof, with sales up 14% year-over-year and net profit at $23 Billion!  Guidewire just…Read More→

Headlines in today’s THEREGISTRY, Columbia Property Trust Defaults on $1.7B in Mortgage Notes on Buildings in San Francisco, Across The Country. The portfolio of seven buildings includes 650 California St. and 201 California St., both in San Francisco, as well as buildings in New York City, Boston and New Jersey.  The San Francisco office market,…Read More→

  Between 2029 and 2022, according to the SF Business Times, the share of workers living near its office locations fell, with the largest drop of 70% occurring in San Francisco,  followed by New York, Washington D.C. and Chicago falling by 67%, with the number of Yelp workers living in Florida and Texas going up…Read More→

  Slack just announced it is giving up 230,000 sf of headquarters office space at 500 Howard St. in San Francisco and moving into Salesforce Tower. Salesforce owns Slack. Down in Los Angeles, Brookfield defaulted on $784 million in loans on two downtown Los Angeles office towers, 555 West Fifth Street and the other at…Read More→

Twitter Being Sued For Not Paying Almost $7 million in Rent On SF Headquarters. Square sublet 78,000 sf of Downtown Oakland office space to Callisto in 2021 but now Callisto has put their space on the sublease of a sublease market. The total office vacancy in the Oakland office CBD market ranges from 18-25% depending…Read More→

  Meta (Facebook) just put 432,000 square feet of Class A San Francisco office space on the sublease market, with a lease term running until March 2031. This adds office inventory to the current 28% San Francisco office vacancy. Up in Portland, KBS REITS just defaulted on a 224,000 sf LEED Gold-certified office building with…Read More→

  Janet Pogue McLaurin with Gensler, one of the nation’s gurus on predicting the future of corporate office layouts, functionality, and many other nuances of the office environment, wrote an article illustrating the key findings of a recent Gensler survey of CoreNet Global end users. ”Respondents rated the space effectiveness for each of the five…Read More→

Two commercial real estate stories caught my eye in the January 12th, 2023 Bisnow daily newsletter. I think they are just warning signs of what might be coming throughout 2023 and beyond.  A few weeks ago I blogged that a number of major banks were unloading at a discount office building loans, and that in…Read More→

  “The Bay Area was ranked first on a list of 10 markets that lenders are most concerned about in terms of performance in 2023, according to a report released by real estate firm CBRE this month.  Phoenix and Portland rank No. 2 and 3, respectively, with Western markets Las Vegas, Los Angeles and Portland…Read More→

  On top of already putting hundreds of thousands of square feet of San Francisco office space on the market, Salesforce just announced it will lay off 10% of it’s employees. The company is taking a $450-650 million dollar write-off due to office space reductions. It currently owns or leases 1.9 million square feet of…Read More→

In a January 5, 2023 report by Aaron Jodka, Head of Research for Colliers U.S. Capital Markets, investment sales volume was down in November 2022 72% as compared with November 2021. Strong early-2022 numbers will still make last year a terrific success, but industrial volume is now down 80% and multi-family down 74%. Central Business…Read More→

I opened my daily Bisnow.com newsletter and the headlines blew me away. At the top was “Bed Bath & Beyond With 950 Stores Nationwide, Facing Bankruptcy”,  and below this was “Salesforce To Exit Office Space, Slash Workforce 10%”, but if this weren’t enough the next headline read ‘Amazon Ups Layoffs To 18,000”

Bisnow Dumber 16, 2022  “More than 71% of corporate real estate professionals say they expect hybrid work to result in space demand reductions of at least 20%, according to a survey from Colliers and CoreNet Global. Almost 19% expect that demand to shrink by 40% or more, while just 7% believe that the move to…Read More→

Bisnow Dec. 16, 2022 “Hybrid work plans are starting to become set in stone across more of corporate America, and as more companies finalize their policies, how much office space they are going to cut from their footprints is becoming clearer. More than 71% of corporate real estate professionals say they expect hybrid work to result in…Read More→

At the Bisnow December 8, 2022 D.C. Region Finance and Deal-Makers Summit, major commercial real estate lenders discussed how they are dealing with the current turbulent times. “The pullback is happening across all asset classes, given how this year’s sharp rise in interest rates has dramatically altered the math for new deals. But Ekeroth, Regional Director with Northwestern…Read More→

According to a new survey by Clarify Capital and reported by SF Business Times December 12, 2022, “The survey found about 68% of those working remotely would prefer to look for a new job with remote options if forced to return. About 27% would try to negotiate a higher salary instead of searching for a…Read More→

  Meta has placed 114,000 sf off office space in Fremont on the sublease market. It is also rumored to be considering giving up 430,000 sf at 181 Fremont St. in San Francisco. Pinterest giving up a chunk of their San Francisco office space. Salesforce just this week considering giving up more space in San…Read More→

Bisnow December 6, 2022: “In an effort to entice employees back into the office, companies have ramped up digestible perks like beverages and food, but a recent survey conducted by proptech firm Essensys indicated that employees don’t care about snacks or other frivolous amenities — they want better technology and flexible workstations. Of the 1,000 U.S. workers the…Read More→

In The SFRegistry December 2, 2022, Marc Benioff, founder and CEO of Salesforce said this: “There’s a lot of things pre-pandemic that we had in our company that are expenses that we don’t need post-pandemic,” Benioff stated. “So before the pandemic, the percentage of remote workers for Salesforce was approximately 20 percent. For other companies…Read More→

In a BisNow article published November 17, 2022, “Fifty-eight percent of those surveyed plan to improve or expand their existing occupancy, Many are also implementing new procedures or technologies to help manage the shifting flor of employees into the office. Although hybrid work schedules are now the norm for 70% of workers, only one-third of…Read More→

The New York Times recently published a lengthy article titled ‘After pandemic, office buildings are still in trouble”. “ The value of office buildings could plunge 39%, or $454 billion, in the comping years, according to a recent study by business professors at Columbia University and New York University…In a sign of how fast the…Read More→