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close video Commercial real estate market will worsen if economy slows: Jeff Greene

Real estate entrepreneur Jeff Greene addresses fears of commercial real estate collapse on ‘The Claman Countdown.’

The threat of a commercial real estate market crash is hanging over the already fragile U.S. economy. 

About $1.5 trillion in commercial mortgage debt is due by the end of 2025, but steeper borrowing costs, coupled with tighter credit conditions and a decline in property values brought on by remote work, have increased the risk of default. 

Fitch Ratings already estimated that 35% — or $5.8 billion — of pooled securities commercial mortgages coming due between April and December 2023 will not be able to be refinanced. 

"Commercial real estate is melting down fast," Tesla CEO Elon Musk said in a recent tweet. "Home values next."

WORLD BANK WARNS GLOBAL ECONOMY TO SLOW SHARPLY AMID HIGHER INTEREST RATES

The Amazon HQ2 Met Park campus in Arlington, Va., April 3, 2023. (Nathan Howard/Bloomberg via Getty Images / Getty Images)

Office and retail property valuations could ultimately plummet as much as 40% from peak to trough this year as higher interest rates make it harder for investors to refinance trillions in looming debt, according to Lisa Shalett, chief investment officer for Morgan Stanley Wealth Management.

"MS & Co. analysts forecast a peak-to-trough CRE price decline of as much as 40%, worse than in the Great Financial Crisis," Shalett wrote in a weekly investment note. "More than 50% of the $2.9 trillion in commercial mortgages will need to be renegotiated in the next 24 months when new lending rates are likely to be up by 350 to 450 basis points."

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Complicating the matter is the fact that small and regional banks are the biggest source of credit to the $20 trillion commercial real estate market, holding about 80% of the sector's outstanding debt. Regional banks were just at the epicenter of the upheaval within the financial sector, and there are concerns that the turmoil could make lending standards drastically more restrictive.

Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference after a Federal Open Market Committee meeting in Washington, D.C., March 22, 2023. (Al Drago/Bloomberg via Getty Images / Getty Images)

During a credit crunch, banks significantly raise their lending standards, making it difficult for businesses or households to get loans. Borrowers may have to agree to more stringent terms like high interest rates as banks try to reduce the financial risk on their end.

Banks were already tightening lending standards before the crisis within the industry began. A quarterly survey of loan officers published by the Fed showed that a growing number of banks tightened lending standards and saw a sharp slowdown in demand during the final three months of 2022.

BANKING CRISIS THREATENS TO IGNITE CREDIT CRUNCH OF US HOUSEHOLDS: WHAT TO KNOW

"Refinancing risks are front and center" for commercial property owners, a separate Morgan Stanley note said. "The maturity wall here is front-loaded. So are the associated risks."

Even before the collapse of Silicon Valley Bank and Signature Bank in early March, the commercial real estate market was struggling with a number of challenges, including higher interest rates and waning demand for office space as more companies allow employees to work from home.

Pedestrians walk by a First Republic Bank April 26, 2023, in San Francisco. (Justin Sullivan/Getty Images / Getty Images)

"Commercial real estate, already facing headwinds from a shift to hybrid/remote work, has to refinance more than half of its mortgage debt in the next two years," Shalett wrote in a weekly report published last month.

The Federal Reserve has raised interest rates 10 times over the past year from near zero to around 5%. Policymakers have indicated that another rate hike could be on the table this year amid signs of underlying inflationary pressures.

Still, others are less pessimistic about the future of the commercial real estate market. Solita Marcelli, UBS Global Wealth Management chief investment officer of Americas, said the headlines regarding office space "are worse than reality."

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"An expected credit crunch on the back of rising cost of funding for banks may further compound its troubles," Marcelli said in a note. "We don’t believe a repeat of the 2008 liquidity crisis is likely — where capital markets essentially closed for financing.

"In our view, the health of the overall banking system and market liquidity conditions are substantially better than they were during the [Great Financial Crisis]."

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Snipers, Secret Service sweeps and a personal chef on standby: Scotland awaits Trump’s arrival

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Snipers, Secret Service sweeps and a personal chef on standby: Scotland awaits Trump's arrival

Donald Trump likes a wall. And now he has his very own 15ft-high metal barrier creating a fortress as he tees off for a weekend of politics, play and precision in Scotland.

An almost surreal contrast now exists in the tiny Ayrshire village of Turnberry.

On one side, the stunning coastline and luxury hotel that bears the president’s name. And on the other, an armed buffer zone with sniper teams and road checkpoints.

This visit is unlike those that have gone before.

The threat level and associated security on display is unprecedented following the attempted assassination of Trump at a campaign rally in the US.

“It would be inappropriate for me to plan an operation and not bear in mind what has happened,” the senior officer in charge of this weekend’s policing efforts told me.

Green military-type truck
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Military trucks are part of a security effort that comes just a year after an attempted assassination

Fence
Black security van
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A ‘counter terror’ firm was spotted near the area, which is ringed by a 15ft fence

Turnberry, and its population of about 200 people, have this week witnessed a never-ending stream of Army trucks, terrorist sweeps, road checkpoints, airspace restrictions, sniper positions being erected and Secret Service agents roaming around.

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It is the most extensive security deployment in Scotland since the death of the late Queen in 2022.

It is estimated around 5,000 officers will be on the streets, with teams coming from across the UK to assist.

The spectacle primarily centres on Donald Trump coming to play golf before the arrival of Prime Minister Sir Keir Starmer for talks, likely on Monday.

The president, whose mother was born on the Scottish island of Lewis, is then scheduled to travel to his Aberdeenshire resort where a new golf course is set to open.

Police on buggies patrol as golfers play, near the Trump Turnberry golf course
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Police on buggies are patrolling near the course on Scotland’s east coast

Police lorry
Police security tape is placed across a clothes recycling bin near the Trump Turnberry golf course.
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Police have even taped off a clothes recycling bin near the course

‘Trump is a decent boss’

Stephanie Campbell and Leanne Maxwell live in Turnberry and used to work at the Trump-owned resort, like many other locals.

The pair told Sky News the very first lesson staff at the resort are given is not in fine service or guest etiquette, but in how to respond to a bomb threat.

It is claimed there are posters above the landline phones in the hotel with instructions on the worst-case scenario.

Stephanie Campbell and Leanne Maxwell work at the Trump course
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Stephanie Campbell and Leanne Maxwell say staff are trained in dealing with bomb threats

Stephanie told Sky News: “I had no issues working for him, he is a really decent boss.

“The last time he came there was an element of excitement, I think this time there comes with an added element of concern.

“It brings a lot higher threats and security and it’s much more difficult for everybody in the area.”

Donald Trump waves to protesters while playing golf at Turnberry golf club, in  2018
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Mr Trump at Turnberry in 2018 – he will also visit his Aberdeen course on this trip. Pic: AP

A flag flutters on the Ailsa Championship Course at the Trump Turnberry Golf Resort in Turnberry.
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File pic: Reuters

Echoing her concerns, Leanne told Sky News: “Security is obviously being bumped up. It’s quite worrying. He’s quite a man, ain’t he?”

Sweeps of the rooms are carried out by US Secret Service agents after housekeeping staff complete their duties and Trump’s meals, they say, are prepared by a personal chef to avoid the risk of poisoning.

To the outside world, these measures seem standard for a US president. But to those who live in Turnberry, it’s far from normal when they have a date with the commander-in-chief.

Marine One helicopter
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Marine One is in place awaiting the president’s arrival

A view of the hotel at the Trump Turnberry Golf Resort. File pic: Reuters
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File pic: Reuters

Awkward encounters

Prestwick Airport has become something of an American airbase in recent days.

The infamous armoured limousine, known as “The Beast”, has been spotted being wheeled out of a US military plane as the presidential motorcade prepares for his arrival tonight.

Greeting the president at the doors of Air Force One will be the secretary of state for Scotland, Ian Murray, who previously supported a motion alleging Trump was guilty of “misogynism, racism and xenophobia”.

Another awkward encounter could come in the form of Scottish First Minister John Swinney’s showdown with Mr Trump next week.

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The SNP leader, who publicly backed Kamala Harris in the presidential race, called for September’s state visit to be scrapped after the Ukrainian president’s visit to the White House descended into a shouting match live on TV earlier this year.

Demonstrations are planned throughout the weekend, with marches and protests announced in Glasgow, Edinburgh and Aberdeen.

Kirsty Haigh, from Scotland Against Trump, claims the president uses Scotland to “cleanse his image” and he should not be able to use the country as an “escape” from his views.

She told Sky News: “He should not be welcomed by us, by our leaders.

“We want to see a Scotland that is very different than [the] America that’s being created.”

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Trump hopes to escape Epstein controversy, but story risks following him to Scotland

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Trump hopes to escape Epstein controversy, but story risks following him to Scotland

I knew Donald Trump when he was nothing.

Nothing like he is today, to be precise.

It was the 18 April 2006, and he had landed by helicopter at St Andrew’s, on his way to survey a stretch of Aberdeenshire coastline he was going to turn into a golf course.

He duly delivered and “Trump International” is a stunning addition to Scotland’s golfing real estate, alongside his other course at Turnberry.

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What do Scots think of Trump visit?

Back in 2006, Trump was big time and big news.

He was the brand built on property and showbiz and, upon arrival, the star of TV’s The Apprentice breezed his way through our interview, obliging us by pointing down the barrel of the camera and delivering his trademark “you’re fired”.

We talked investment, Scottish roots and some local objections to the golf course.

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I said it was all a bit like the film Local Hero, which likened him to the rich guy played by Burt Lancaster and he seemed happy enough.

Innocent times.

US business tycoon Donald Trump saying "You're fired" at the Old Course in St Andrews, Scotland in 2006
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In 2006, the host of The Apprentice delivering his trademark ‘you’re fired’ finger point while visiting Aberdeenshire. File pic: PA

Donald Trump visits the site of a proposed golf course on the Menie Estate near Aberdeen in 2010
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Donald Trump promoting his plans for a golf course on the Menie Estate near Aberdeen in 2010

Fast forward 20 years to President Trump and we are braced for his latest return ‘home’. For this son of Scotland (his mother is from the Isle of Lewis), it’s a homecoming from hell. Hellish on security logistics, at least.

You might think a trip to the old country would carry an element of triumph, wrapped in a nation’s pride. He’s the prodigal who made president, after all – think Biden, Ireland, and the rock star welcome rolled out there for one of their own.

Not so for President Trump. The dynamic’s different with the Donald – the heartland he’ll visit isn’t loved up, it’s locked down. Same as it ever was, whenever he lands in Scotland.

File photo dated 03/05/23 of US President elect Donald Trump playing golf at his Trump Turnberry course in South Ayrshire during his visit t
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The US president at his Turnberry course in 2023 amid tight security. PA file pic

Former US president Donald Trump playing golf at Turnberry golf course during his visit to the UK. Picture date: Tuesday May 2, 2023.
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File pic: PA

Hundreds of extra police officers have been drafted from around the country to hermetically seal his golf courses in Turnberry and Aberdeenshire. A private trip in two very public settings demands a huge security operation, complicated by an army of protestors mobilising for what they’re calling a “carnival of resistance”.

Demonstrations are planned over a range of causes – organisers cite “threats” to democracy, climate, the global economy and more.

Trump protestors on the beach near to the Trump Turnberry resort in South Ayrshire, where US President Donald Trump and first lady Melania Trump are spending the weekend.
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Protestors in 2023 gather at Trump’s Turnberry resort during his visit. File pic: PA

Protesters arrive on a beach near Turnberry golf club in 2018
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Demonstrations, like this one in 2018, near Turnberry require policing. File pic: AP

Simon Brodkin (aka Lee Nelson) is removed from a press conference by Republican presidential candidate Donald Trump at Turnberry Golf course
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Comic Simon Brodkin, appearing in character as Lee Nelson, is led away by security during an anti-Trump protest at Turnberry in 2016. File pic: Reuters

There is no cause untouched by a president of the US and none forgotten by this weekend’s protests.

Scotland leans left of Donald Trump, and critics will lean into an effort to let him know.

It’s an awkward setting for a charm offensive by Prime Minister Sir Keir Starmer and Scotland’s First Minister John Swinney.

As the biggest show in politics rolls into town, they will polish the script on trade negotiations, wary of a president distracted, unpredictable and prone to changing the plot.

His distraction, of course, is the political drama back home.

Read more from Sky News:
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Trump knew he appears in Epstein files

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Trump will welcome a weekend under the radar as an opportunity to escape the Jeffrey Epstein controversy, but there’s every chance the story will travel with him.

Daily efforts to steer the media away from the scandal haven’t stemmed the flow of persistent enquiry and revelations that cement Trump’s relationship with Epstein in the public consciousness, and so further raise questions of cover-up.

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Trump in Scotland: Escaping Epstein?

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Trump in Scotland: Escaping Epstein?

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The Epstein files are increasingly consuming the Trump administration, while Ghislaine Maxwell, Jeffrey Epstein’s co-conspirator and accomplice, has met Department of Justice officials and been ordered to appear before a congressional committee.

This, as the Wall Street Journal continues to reveal the alleged extent of Donald Trump’s relationship with the convicted sex offender.

Meanwhile, the president is due to arrive in Scotland to honour his mother, play golf, and meet Sir Keir Starmer and Scottish First Minister John Swinney.

If you’ve got a question you’d like the Trump100 team to answer, you can email it to trump100@sky.uk.

You can also watch all episodes on our YouTube channel.

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