🦧 negative signs everywhere (commercial real estate)
🦧 negative signs everywhere (commercial real estate)
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us real estate developers are slowing down and that is a noteworthy signal
these are property developers that lead major office space construction projects. reasons include:
economic uncertainty
soaring interest rates (less willingness to pour capital into these projects)
workers are returning to offices slower than expected
earnings calls are also telling us the same thing
VNO 0.00%↑ (vornado realty): "there’s increasing uncertainty in the world and tenants are acting accordingly" (q3 '22 earnings call; nov-01)
KRC 0.00%↑ (kilroy realty): "there are times to buy, times to sell, times to develop and times such as now to be patient” (q3 ‘22 earnings call; oct-26)
some key statistics:
the current office vacancy rate stands at 12.5%, up from 9.6% in ‘19 and the highest since ‘11, per costar
37% of the space under development remains available (aka, not yet signed / secured)
the figure is more than double the rate in ‘19 and approaching the record 39% in ’08, per costar
~210m square feet of sublease space is currently available, according to costar, a record high since ‘05
VNO 0.00%↑ (vornado realty trust), KRC 0.00%↑ (kilroy realty), BAM 0.00%↑ (brookfield asset management)
💡 something im thinking about
in case you haven’t seen these string of tweets from sbf himself… (click image)
that's all, folks 🐒
