The San Francisco Business Times August 29, 2023 reported that the latest Survey of Business Uncertainty (what a name!) from the Atlanta Federal Reserve Bank, University of Chicago and Stanford University, which surveys 500 business executives each month, ‘Executives predicted that about 72.6% of their employees would be working full-time onsite in 2028, down slightly…Read More→

According to an article just published August 17, 2023 n Bisnow, “…conversions had been largely characterized as a drop in the empty-office bucket. It may seem like an extreme step, but as expectations for full Class-B and C offices crumble and renovation costs climb, demolishing buildings to free up the land under them for a…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→

  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→

ResumeBuillder surveyed 1,500 full-time corporate workers in June, 2023 and found that: 85% of workers go to the office at least once a week 63% said going to the office improves productivity, top reason being more efficient teamwork 13% said productivity goes down in the office, and 25% of these say it’s a result of…Read More→

Several of my friends and associates sent me the press release on July 6, 2023 about Apple purchasing a 161,000 square foot office building in Cupertino for $435/rsf. This is very positive news! Their ‘spaceship’ Apple Park in Cupertino can house 12,000 employees. Back in August, 2022 there was a corporate mandate that employees had…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→

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→

  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→

  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→

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→

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→

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→

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→

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→

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→

  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→

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→

  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→

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→

Hilco Real Estate Senior Vice President Steve Madura, who specializes in distressed assets, forecasts that $500 billion of commercial mortgage loans coming due over the next few years will lead ‘likely lead to a high demand for’ his services. “The combination of rising interest rates and a basically frozen capital market has created what Madura…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→

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→