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close video Commercial real estate industry on edge as downtown empty office space goes unused

Some financial analyst worry that the commercial real estate industry is in danger due to the increase of vacant office space with the rise of remote work.

Some Morgan Stanley financial analysts say the commercial real estate industry could be headed for a crisis worse than the 2008 great recession. This comes after businesses have left downtowns across the country with an increase in remote work and higher interest rates. 

Many downtown buildings are owned by investment firms who rely on bank loans. But with businesses not renting as much office space and rising interest rates, some worry these firms may not have the money to pay back the banks.  

In downtown Minneapolis, people are returning to see the Minnesota Twins play ball, attend a concert or catch a Broadway show. 

"As we sit here today, we're really beginning to move in a positive direction," Steve Cramer, president and CEO of the Minneapolis Downtown Council and Downtown Improvement District, said. "Like all downtowns, that pandemic hit like a ton of bricks and things really shut down. Then we of course, had the murder of George Floyd here in our city and that caused civil unrest here, and had implications around the country, around the globe. And so we've really been kind of working our way back from that set of events in 2020." 

INVESTORS RETREAT FROM COMMERCIAL REAL ESTATE BONDS 

Employees working in downtown Minneapolis use the skywalk to avoid the chilly weather. The Minneapolis Downtown Council says about 65% of people are coming into the office at least once a week, up from 50% in 2022. (Mills Hayes/Fox News / Fox News)

Cramer worries about the office buildings that are 30 to 40 years old. 

"We have to focus some attention on what can a new life for those buildings be? Maybe they can be converted into residential units," Cramer said. "The newer buildings with amenities, I think are going to do just fine in attracting the office demand."

Last week AT & T announced it was leaving downtown Minneapolis for the suburbs.  

"The move will be complete by the end of August, allowing us to use our office space more effectively. It’s important to note that these jobs will remain in the greater Minneapolis area, and we remain committed to Minnesota," Clay Owens, director of public relations for AT&T, said. 

Andy Babula is the Director of the Real Estate Program and the Shenehon Center for Real Estate at the University of St. Thomas. 

"People are working from home a lot more now. If they do want to go into the office, they're going to want somewhere nearby," Babula said about the decision to move to the suburbs where many employees tend to live. 

CBRE Global Commercial Real Estate Services says office vacancy rose during the 2008 financial crisis, but it was led by a recession. This rise is vacant office space is driven by a structural shift from the pandemic to remote work. (Fox News / Fox News)

According to CBRE Global Commercial Real Estate Services, in New York City there has been a 7.6% increase in empty office space since the pandemic. In Seattle, an 8.2% increase and in San Francisco, a whopping 25.4% increase. 

COMMERCIAL PROPERTY DEBT CREATES MORE BANK WORRIES 

CBRE says that San Francisco has a large amount of tech tenants, and they have viewed returning to work in person differently. Many employees are asked to come back to work on a more voluntary basis, which explains why they saw such a sharp increase in empty office space in comparison to other cities.

People who live in downtown Minneapolis say empty office space surrounds them. (Mills Hayes/Fox News / Fox News)

In Minneapolis, there’s only been a 2.1% increase in empty space, but some worry the problem could get worse.  

"If the pandemic started three years ago, people may still have a few years left on their lease. So, over the next couple of years, we are going to be seeing these leases expire and companies as they expire will likely either vacate or downsize," Babula said. 

Babula also said there is concern that the value of the buildings will decrease and impact the tax base. 

US REAL ESTATE HAS ‘MONUMENTAL OPPORTUNITY’ TO SOLVE HOUSING CRISIS IN 2023: EXPERT

"The city like Minneapolis is going to collect less taxes from every building downtown if its value is lower by 20 to 30%. That's less taxes in their pocket, and that has to then get shifted to others in the city, to the residents and other businesses throughout the city. So that's a concern as well," Babula said. 

With less demand for office space, investment firms who own these downtown buildings may not have enough money to pay off their loans to the banks.  

In quarter one of 2020, Seattle had 9.4% of empty office space in downtown. By 2023, that number has grown to 17.6 % of empty office space. (Fox News / Fox News)

"Do we believe that we're going to see defaults? Absolutely. Are we keeping a close eye on the banks that hold a lot of these loans? Absolutely, but generally we believe that we are going to be able to come through the other end of this with some scratches and bruises, but nothing that is going to drive the collapse of the banking system," Julie Whelan, head of global head of occupier thought leadership at CBRE, said.  

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Whelan said downtowns are not dying by any means, they're just going through an evolution right now. Many are shifting towards a footprint of more residential, retail and entertainment to make up for the office crowds leaving.  

"If the different sides of the private sector and the public sector can come together and create an impetus drive to change in our cities that we’ll actually come out feeling stronger when we look ahead 10 years from now," Whelan said.

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UK

More than 1,000 doctors urge MPs to vote against assisted dying bill

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More than 1,000 doctors urge MPs to vote against assisted dying bill

More than 1,000 doctors have written to MPs urging them to vote against the assisted dying bill, calling it a “real threat to both patients and the medical workforce”.

The bill – which is due to be voted on by MPs for a final time on 20 June – would allow terminally ill patients from England and Wales to end their lives “on their own terms”, providing they have a life expectancy of six months or less.

A separate bill is currently passing through the Scottish parliament.

But doctors from across the NHS have written to MPs, warning them of their “serious concerns”.

Notable signatories include Sir John Burn, a geneticist who has led decades of cancer research, Sir Shakeel Qureshi, who was knighted for his work in paediatric cardiology, Professor Aileen Keel, the former deputy chief medical officer for Scotland, and Baroness Finlay, a Welsh doctor, professor of palliative medicine and member of the House of Lords.

The letter is signed by four doctors who hold OBEs, two who have MBEs, and one CBE.

The letter says that while a debate is needed on end of life care, “this bill is not the answer”.

More on Assisted Dying

It raises concerns that not enough evidence has been heard from doctors, people with disabilities and other marginalised groups.

“This bill will widen inequalities, it provides inadequate safeguards and, in our collective view, is simply not safe,” it goes on to say, calling it a “deeply flawed bill”.

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May: Two people given months to live debate assisted dying

Read more:
Why is assisted dying so controversial – and where is it already legal?
Five stories that bring the assisted dying debate home
Two terminally ill patients give opposing views on assisted dying

Professor Colin Rees, a member of the Royal College of Physicians working group on assisted dying, said it was the “single most important piece of healthcare legislation in 50 or 60 years”.

“It will have very profound consequences for the future and many doctors are really concerned that members of parliament are not hearing the views of the medical profession.”

He said many doctors who remain neutral, or who even support the principle of assisted dying, remain concerned about the bill.

“We don’t think it’s a bill that is safe, that protects patients, protects families, and protects the medical workforce.”

What stage are the two assisted dying bills at now?

The Terminally Ill Adults (End of Life) Bill passed the House of Commons with a majority of 55 in November.

Scotland’s Assisted Dying for Terminally Ill Adults (Scotland Bill) pass with a 14 majority in May.

But the legislation has not been without controversy, with 150 amendments made to get it through the first stage. 

The bill will return to the House of Commons for a third reading this Friday. If voted through by MPs it will then proceed to the House of Lords.

‘No safeguards against coercion’

One of the areas of concern raised by the medics was the inability to properly identify patients at risk of coercive control.

“Vulnerable patients are at risk of coercion with women, victims of domestic abuse, and the elderly at particular risk,” the letter says.

It also warned it would widen social inequalities, with patients who do not have the resources for a comfortable death more likely to opt for assisted dying.

“People who struggle to pay for heating or care or wish to preserve their assets for their children are at high risk of choosing to die if the option is available and the alternative is more difficult.”

Data from the Annual Report of Dying With Dignity from Oregon in 2024 found 9.3% of those people who choose assisted deaths do so for financial reasons.

‘Doctors get it wrong 40% of the time’

Concerns have also been raised around the inaccuracies of medical prognosis.

“Research demonstrates that doctors get prognosis wrong around 40% of the time,” the letter says.

“As such, patients may end up choosing an assisted death and losing what could have been happy and fulfilling months or years of life.”

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February: Why has the Assisted Dying Bill divided opinions?

The bill is also a risk to families, the letter says, as it does not require doctors to speak with family members.

“A close relative may know nothing until they get a call to arrange collection of their relative’s body,” it says, adding that there is no mechanism for a family member to raise concerns about a request.

The letter also addressed the potential impact on the medical workforce.

Evidence from the Netherlands suggests “doctors feel pressurised when dealing with patient requests for assisted deaths, meaning that doctors may end up having involvement despite it being against their principles, because they want to help their patients”.

Doctors’ letter highlight concerns about the risk to:

Patients

Does not necessitate treatment of depression or other remediable factors; does not protect against risk of coercion, particularly for women and the elderly; does not ensure that the assessment panel must meet the patient; will widen social inequalities, adversely affecting the socioeconomically deprived; does not take account of the inadequacies of assessing medical prognosis.

Families

Does not necessitate any involvement of families. The first they may know is when they are called to come and collect the body; assumes that an assisted death is ‘better’ than a well-managed natural death but there is little or no evidence in the literature for this assertion.

Palliative care

Makes it a legal right for patients to access assisted dying, but does not mandate a comparable right to be able to access other end of life services; means that patients may choose assisted dying because palliative care provision is inadequate • Places palliative care consultants (a speciality in which 80% of doctors are opposed to assisted dying) at the heart of delivering the services; ignores the fact that the UK is currently ranked higher for its palliative care services than any country that delivers assisted dying and the fact that countries that introduce assisted dying almost invariably see a decline in the quality of their palliative care services.

The medical workforce

Does not adequately recognise the risk of harm to doctors from delivering assisted dying; is unclear whether assisted dying should be considered a ‘treatment’.

Provision of adequate care

Proposes a panel which is not a multidisciplinary team and will not know the patient; proposes use of drugs which are not regulated or approved and does not mandate any monitoring of their complications.

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Politics

Illegal crypto mining surges in Malaysia amid unclear policies

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Illegal crypto mining surges in Malaysia amid unclear policies

Illegal crypto mining surges in Malaysia amid unclear policies

Malaysia’s crypto mining market may hit $5.13 billion in 2025, but illegal mining and a lack of regulation could limit its full potential.

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Environment

Several Waymo self-driving I-Pace electric cars set on fire in LA riots

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Several Waymo self-driving I-Pace electric cars set on fire in LA riots

At least 5 Waymo self-driving I-Pace electric cars were set on fire amid protests that turned violent in Los Angeles this weekend.

It could represent as much as 5% of Waymo’s fleet in Los Angeles being destroyed.

The United States Immigration and Customs Enforcement (ICE) launched several raids in the Los Angeles area last week that triggered large-scale protests across the city over the weekend.

The protests were mostly peaceful and aimed to bring attention to federal agents indiscriminately arresting and detaining people, but in some cases, they were violent clashes with the police.

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Things took a turn for the worse with President Trump calling the National Guard.

There have been several instances of rioting, looting, and general property damage.

In a unique case, it appears that one or more rioters purposely called multiple Waymo vehicles to Arcadia and Alameda streets, where they slashed the vehicles’ tires, broke the windows, and wrote anti-ICE messages on them.

At around 5 PM on Sunday, the Waymo vehicles were set on fire:

With the ongoing protests, the fire department couldn’t get access to the vehicles and they eventually completely burned down:

Waymo is believed to be operating a fleet of about 100 self-driving cars in the Los Angeles area. Therefore, a significant percentage of the fleet was burned down today.

The company completes over 120,000 rides per week in California, but it operates a bigger fleet in the Bay Area and covers a big service area than in LA.

Waymo shouldn’t have too many issues replenishing its fleet, considering it recently acquired over 2,000 Jaguar I-Pace electric vehicles to more than double its entire fleet over the next year.

The company currently operates over 1,500 vehicles across San Francisco, Los Angeles, Phoenix, and Austin.

With a high utilization rate, the relatively small fleet has already taken significant market shares of those ride-hailing markets. It is estimated that Waymo accounts for approximately 20% of the ride-hailing market in San Francisco.

The new vehicles are going to enable Waymo to expand into new markets.

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