We don't really NEED more office space but I keep my eyes open because we're in some ****ty class B stuff that we were thinking about upgrading from before COVID hit. I don't get into negotiations, just browse Loopnet, etc.

The prices simply aren't coming down. Places just sit vacant.

Will there have to be a large wave of bankruptcies before that happens?

I read that ~25% of CRE loans end this year. Gonna cost a lot more for those leases. You would think there would be some fallout here pretty soon.

Sellers praying FED drops rates enough that the bid comes closer to the ask.

Someone on here was talking about trying to negotiate their lease. Landlord wouldn't budge and now space been sitting vacant.

Also heard of small businesses choosing to close up shop in the face of rent increase.

Seems like a big disconnect here with all this.

It depends on what Class of CRE you're seeking. Class B-D rates are coming down and are probably going to crater.

Class A is a different animal. There just isn't a huge amount of Class A supply going unleased. Everything I'm reading says to not expect Class A rates to drop. It's disappointing because we're definitely looking to lease in the next year.

Casey TableTennis said:

---

One reason is the debt covenants. Some have to maintain a certain rent rate or would have a technical default.

TI, free rent up front, etc… are where a tenant can make it up.

---

This.

Check out the sublease market. There are lots of good deals out there.

From what I see, class A office rents are coming down. Class B in good locations are remarkably holding.

Class B in bad locations and class c are not lease able.

Troglodyte said:

---

Check out the sublease market. There are lots of good deals out there.

From what I see, class A office rents are coming down. Class B in good locations are remarkably holding.

Class B in bad locations and class c are not lease able.

---

Where would I find subleases listed?

Heard a guy on the radio today say that 2025 is when a huge number of CRE leases come up for renewal and thats the bubble that RE folks are panicking about.

1. Is that true?

2 Why is there a bunch of renewals coming up in 2025 as opposed to being evenly distributed?

Any TIs or free rent with the potential new lease. Are you comparing NNN deals to Full service gross?

A landlord will look at the economics of the deal and see if it's accretive. Depending on the incentive package it's better to pass on a low rate as they never break even or the break even is too far into the lease term.

Some of it is coincidence some of it is landlord/tenants kicking the can down the road and doing short term extensions during the pandemic or the brief period of economic uncertainty prior to.

Stat Monitor Repairman said:

---

Heard a guy on the radio today say that 2025 is when a huge number of CRE leases come up for renewal and thats the bubble that RE folks are panicking about.

1. Is that true?

2 Why is there a bunch of renewals coming up in 2025 as opposed to being evenly distributed?

---

Maybe because when Covid hit people stopped signing 4-7 year leases. So most of them are coming up for renewal.

Premium said:

---

Stat Monitor Repairman said:

---

Heard a guy on the radio today say that 2025 is when a huge number of CRE leases come up for renewal and thats the bubble that RE folks are panicking about.

1. Is that true?

2 Why is there a bunch of renewals coming up in 2025 as opposed to being evenly distributed?

---

Maybe because when Covid hit people stopped signing 4-7 year leases. So most of them are coming up for renewal.

---

That's only one of the problems. The bigger one is the short term bridge debt term expirations from deals originated between 2018 and 2021. Hasn't hit yet because most have extensions built in and operators are still hoping for FED to slash and give them runway through cheaper debts to refinance or get out. It's coming fast, with a small amount already hit with really bad results. 2024-2026 is a record for total loan value expiring I believe.

More than 30 Empire State Buildings worth of office space in NYC remain unoccupied according to recent 60 Minutes report.

95-million square feet of vacant office space.

That happened in the late 00s and that office space got turned into residential. I worked with a ton of people who lived in old JPM space across the street from the office that was converted to apartments. I can see that happening here, but I'm not sure if the demand is still there like it was 15 years ago.