US Office Bldgs Being Sold At 50% Discount Or More
USA – With the country’s office market hit by rising interest rates and office space downsizing by tenants, Steady Capital’s Managing Partner Min Suh revealed that office properties across the United States are currently being divested at a steep discount of at least 50 percent, reported BNN Bloomberg on Tuesday (Oct 3, SGT).
Suh also disclosed that commercial real estate (CRE) debt amounting to more than US$1.5 trillion is forcing banks to slash their exposure to the office market in favour of investment-grade debt. Notably, Steady Capital is a property company focused on private equity investments in select markets in the US.
Meanwhile, a recent media report stated that some vacant office buildings in San Francisco are a step closer to being converted into residential properties after the city’s downtown area lost about 150,000 daily workers since the COVID-19 pandemic.
According to the San Francisco Chronicle, owners of eight office buildings in San Francisco have responded to a request from the city government for office landlords keen to turn their commercial properties into condos or apartments.
All of the office buildings are situated in downtown neighbourhoods, including the Civic Center area and the Financial District.
“The much-discussed push to revive downtown San Francisco by converting empty office buildings to housing is starting to gather real-world momentum, with property owners looking to take advantage of a political climate in which the mayor and Board of Supervisors are desperate to activate the city’s struggling central neighbourhoods,” stated the San Francisco Chronicle.
Overall, the eight office buildings have a combined area of under 1 million sq ft. And their conversion to residential properties is unlikely to greatly reduce San Francisco’s current office vacancy rate of 33.9 percent, which is the highest on record.