Bisnow 8/23/23 Goldman Sachs is cracking down on making sure everyone comes back to the office full-time “though revenue-producing employees have for the most part returned full time, the publication reports that senior managers are frustrated by the reluctance of other staff, “constituting a significant chunk of its workforce,” to come back.   Google is…Read More→

  I was recently asked by a business reporter if, with suburban Class A office buildings like 2300 Clayton in Concord, California selling for as low as $110 a square foot, are we at the bottom of the cycle? This particular office building is one of my favorite, and back in 1985 I brought the…Read More→

There was a recent announcement of the largest office deal done in the past 12 months in the Oakland area. Delta Dental leased the third floor of 1333 Broadway (where 40 years ago I had my offices at Grubb & Ellis), and while it was great that this ‘largest’ deal was done, the size of…Read More→

According to the SF Business Times, ’San Francisco Sees Significant Jump in Return-To-Office Study’, with a 38% year-over-year increase in visits to office buildings in San Francisco. San Francisco foot traffic downtown remains down 56% from 2019. Ok, that was the good news.  On August 13, 2023   the U. S. Department of Health and Human…Read More→

  There are a new host of nontraded REITs being formed raising money to look for bargain commercial properties and swoop in when they think the price has dropped low enough to make sense. In a BisNow August , 2023 article “Nontraded REITs in aggregate have produced a total return over the last five years…Read More→

  On average, wrote Jerry Nickelsburg, an adjunct professor of economics at UCLA who helped run the survey, participants in both Northern and Southern California “expect both rental rates and occupancy rates to weaken in the coming year” and do not expect the sector to make a full recovery by 2026. San Francisco Business Times August…Read More→

  The San Francisco Business Times August 7, 2023 referred to a recent CoStar analysis that found 55% of office leases signed before the pandemic have yet to expire, which could spell a lot more office vacancy grief as corporations downsize on renewal or relocate to smaller spaces. ‘”All of the pain we’ve been seeing…Read More→

  Today Google reduced the amount of funds budgeted for closing offices which might be a sign that perhaps the layoffs and worker reductions were coming to an end.  They spent $69 million in cutting space this last quarter, down from$565 million it spent the first quarter of 2023.  There was also a report out…Read More→

Lender Sues to Foreclose on WeWork’s San Francisco Tower ($240 mil loan on a 359,000 sf 20-story Class A office building): Blackstone Reports Income from eal Estate Sales Down 96% in Q2; Commercial Property Distress Hits $71B in Q2, Led By Office; Marketing Of Distressed Loop Building (1.4M sf in Chicago) Will Test Waters For…Read More→

Credits to Stephen Newbold, National Director of Office Research for Colliers. The national vacancy rate just went up to 16.4%, which is a record high. The suburban rate is 16.0% and CBD rate is 17.3%. There are 88 million square feet of new office buildings under construction, with 12 mil in New York City, 8.1…Read More→

Clara O’Brien, writing in Modern Farmer July 11, 2023 wrote a thought-provoking article about using vacant office space to grow fruits and vegetables. “In Calgary, Alberta (Canada) AgriPlay Ventures transformed part of underutilized office space in Calgary Tower Center into one of Canada’s largest indoor urban farms earlier this year…Currently, AgriPlay Farms is negotiating offers…Read More→

I remember back when we had the savings & loan crisis. Back in the 1980’s between 30-50% of the nation’s savings & loans went out of business. Here in the East Bay around 25% of all our Class A office buildings went into foreclosure. I remember several instances where an investor purchased an office building…Read More→

Gleb Tipursky in Entrepreneur referenced three recent reports, The Greenhouse Candidate Experience Report, The Federal Reserve’s Survey of Household Economics, and Inspace’s Returning For Good report. “Unispace finds that nearly half (42%) of companies that mandated office returns witnessed a higher level of employee attrition than they had anticipated. And almost a third (29%) of…Read More→

There have been reports of office building owners paying down their building mortgages so their lender would give them a loan extension. There were several examples in a recent Bisnow article, all with loans that were sent to special servicers which usually means the loan is in default. In the examples mentioned it appears the…Read More→

There was an announcement today about a 41,000 square foot office building in San Rafael, California being turned into 41 studio apartments ‘for those formerly unhoused’. The same Bisnow report also mentioned that Tishman Speyer just secured $150 million in financing to turn a Washington D.C. shopping mall into multifamily. They will demolish the 1970’s…Read More→

Mayor London Breed is trying to get this tax reduce, and it appears to be a double-dipping with the tenant paying for their lease and again for their sublease. San Francisco, with a current vacancy rate of 30% and over 8 million square feet of office space for sublease, has an impacted downtown in desperate…Read More→

I like what San Francisco just did to make it easier to convert existing commercial buildings to housing. It also opened up the type of businesses allowed in Unio Square and the larger downtown area. In the San Francisco Business Times  June 13, 2023, “The city currently has an office vacancy rate of close to…Read More→

  We reported recently that the 312,000 square foot anchor tenant, Nordstrom’s, was shutting down after 35 years, and if you have ever walked on Market Street where the center is located you would experience the huge homeless and drug problems that scare shoppers away. Office occupancy in San Francisco is the lowest in the…Read More→

I’ve been making predictions of the office market in my newsletter, now in its 43rd year of publication. My predictions have almost always come true, and these can be substantiated through my published back issues. There will be several varying factors that will be part of how our office space market stabilizes, and unfortunately with…Read More→

There area large group of folks, including most office building owners, landlord leasing agents, and older executive heads of thousands of companies, who still hold a belief that at some point in the not-to-distant future office workers will return to the office in force. This will be a combination of executive mandate, the recognition that…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→

After hearing from a few of you how doom and gloom some of my blogs and newsletter contact have been, here are a few of the Bisnow April 7, 2023 headlines: Google forges ahead with new office construction; Stonehill closed Q1 with 300M in transactions; Wilson Sonsini signs 119k office lease in midtown Manhattan; Veris…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→

“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→

Statistics just out today by the awesome Colliers Research Department shows that the I-680 Corridor (Danville up to Martinez, and Orinda to Walnut Creek) has a direct vacancy of only 16% and when you include sublease office space, 17.6%. This ranges from a low in Danville of 7.7% to a high at the Pleasant Hill…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→