(Bloomberg) this morning Office woes Brookfield funds have defaulted on a $161.4 million mortgage for a dozen office buildings, mostly around Washington, DC, as rising vacancies hit property values. The loan transferred to a special servicer who is working with “the borrower to execute a pre-negotiation agreement and to determine the path forward,” according to a filing on the commercial mortgage-backed security. Some landlords are defaulting on debt as borrowing costs surge and the prospects of filling up office towers wanes given the rise in remote and hybrid work. Those trends have weighed on values, with prices on office properties falling about 25% in the past year, according to Green Street.
FWIW nobody is looking at residential, but to me (at least in certain markets) it looks quite overbuilt. Recently I was pressed into selling a rental (bad tenants elsewhere in the building causing recurring issues) and was looking for an alternative for a 1031. Couldn't find anything in the metro area (US coastal metro) with a decent yield and I ended up taking the cash. Pretty much anywhere you'd zoom in on Zillow there would be literally dozens of apartments for rent in new five-over-ones built by corporate developers. The thing is that these companies finish the buildings, dump 100 flats on the rental market at their penciled-in prices and wait. I haven't been paying super close attention, but there sure seem to be a lot of places sitting vacant for months.
I don't think, other than maybe small pockets or hi hi-end units, down here in South Florida is overbuilt.