The commercial real estate market is headed for a severe collapse due in large part to sky-high interest rates and declining property values, according to a survey of investors.
Around two-thirds of those who responded to a Bloomberg News survey said they believe that the commercial real estate market will recover only after a crash.
When asked when they believe the price of office properties will hit bottom, 44% said they expect that to happen in the second half of next year while 22% said it will be in the first six months of 2024, according to Bloomberg News.
Just 6% of the 919 respondents said that prices would bottom out this year while 29% predicted that it would happen in 2025 or beyond.
The Fed has raised interest rates aggressively, which is increasing the cost of financing commercial properties at a time when there is also reduced need for them, which has hit rent levels.
Investors are bracing for a possible crisis triggered by default on $1.5 trillion in debt that is coming due by the end of 2025,.
Some $270 billion in commercial real estate loans held by banks are set to mature in 2023, according to Trepp.
Over the next four years, commercial real estate properties must pay off debt maturities that will peak at $550 billion in 2027, according to analysts at Morgan Stanley.
Earlier this month, a study released by economists from NYU Stern Business School, Columbia Business School and the National Bureau of Economic Research showed that vacancy rates are at 30-year highs in many American cities.
In New York City, the vacancy rate was 22.2% in Q1 of 2023.
Office buildings in New York City — the world’s largest commercial real estate market — have lost $76 billion in value from their most recent sales prices, according to broker JLL.
Blackstone and RXR sold the office building at 1330 Avenue of the Americas for $320 million — a third less than the listing price in 2006.
Real estate firm Cushman & Wakefield recently predicted that there could be 1 billion square feet of unused office space in the US by 2030.
The New York Fed said earlier this year that it was unclear when or if the commercial real estate sector would return to its prior strength.
While the residential rental market has bounced back, the retail and office markets have remained slack – largely due to the shift to remote work and online shopping, the bank said in a posting on its website.
Commercial rents in Manhattan are down a lot from where they were before the pandemic, and this weakening trend may continue as more and more commercial tenants roll off leases that were negotiated when demand for office and retail space was far stronger.
Rapper Ghetts has pleaded guilty to causing death by dangerous driving.
The 41-year-old also pleaded guilty to driving dangerously before the fatal collision shortly after 11.30pm on 18 October.
The musician, whose real name is Justin Clarke-Samuel, appeared for a hearing at the Old Bailey via videolink from Pentonville prison, wearing a green polo shirt.
Yubin Tamang, 20, a student from Nepal, died two days after being hit by Clarke-Samuel’s BMW M5 in Redbridge Lane, Ilford, northeast London.
Ghetts, a two-time Mercury Prize nominee and MOBO winner, has been in custody since a preliminary appearance at Barkingside Magistrates’ Court on 27 October.
He will now be sentenced in February.
The rapper was first nominated for the prestigious Mercury Prize in 2021, for his third album Conflict Of Interest. His second nomination for his fourth album, On Purpose, With Purpose, in 2024.
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Paramount has launched a £108.4bn hostile bid for Warner Bros, challenging Netflix, which had reached a $72bn takeover deal with the company.
Paramount said on Monday that it was going straight to Warner Bros Discovery (WBD) shareholders with a $30 per share in cash offer for the entirety of the company, including its Global Networks segment, asking them to reject the deal with Netflix.
On Friday Netflix struck a deal to buy WBD, the Hollywood giant behind “Harry Potter” and HBO Max
Image: The agreement means Warner Bros Discovery’s library of film and TV successes including Harry Potter and Game Of Thrones will come under the same roof as Stranger Things and Squid Game.
The cash and stock deal is valued at $27.75 per Warner share, giving it a total enterprise value of $82.7 billion, including debt.
But Paramount says its deal will pay $30 cash per share, representing $18 billion more in cash than its rivals are offering.
In a statement, Paramount said it was making a “strategically and financially compelling offer to WBD shareholders” and a “superior alternative to the Netflix transaction”.
Image: File pic: iStock
David Ellison, chairman and CEO of Paramount, said: “WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company.
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“Our public offer, which is on the same terms we provided to the Warner Bros. Discovery Board of Directors in private, provides superior value, and a more certain and quicker path to completion.
“We believe the WBD Board of Directors is pursuing an inferior proposal which exposes shareholders to a mix of cash and stock, an uncertain future trading value of the Global Networks linear cable business and a challenging regulatory approval process.
“We are taking our offer directly to shareholders to give them the opportunity to act in their own best interests and maximize the value of their shares.”
Paramount said it had submitted six proposals to WBD in the course of 12 weeks, but that they were never “meaningfully” engaged with.
This breaking news story is being updated and more details will be published shortly.
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The Met Office said strong winds forecast from Monday evening through until Wednesday could cause disruption, with gusts of 50-60mph predicted widely and 70-80mph in some places.
A yellow weather warning for rain comes into force from 6pm on Monday, and will be in place until 2pm on Tuesday, covering parts of southwest England and Wales, and stretching to parts of Herefordshire and Hampshire.
The Met Office has also issued a yellow warning for high winds from Dorset to Cornwall and up to north Wales, in place from 10pm on Monday until 4pm on Tuesday.
It said transport networks could face disruption, with delays for high-sided vehicles on exposed routes and bridges, and coastal roads and seafronts affected by spray and large waves. Power outages are also possible.
For 24 hours from 6pm on Monday, up to 40mm of rain could fall in some areas, with 60-80mm of rain over Dartmoor and high ground in South Wales, which would amount to more than half the average monthly rainfall in December.
The predicted rainfall across southwest England and South Wales is expected to hit already saturated ground and could lead to difficult travel conditions.
An amber warning for wind has been issued for northwest Scotland on Tuesday, from 4pm until the end of the day.
Flying debris “could result in a danger to life” – and there could be damage to buildings and homes along with the risk of roofs being “blown off” due to the “very strong and disruptive winds”, the Met Office warned.
Forecasters added there was the potential for large waves and beach material “being thrown” across sea fronts, roads and properties.
There are also further yellow warnings for wind and rain on Tuesday across Northern Ireland, Scotland, Wales and northern England.
Image: Weather warnings issued for Tuesday. Pic: Met Office
Yellow warnings for wind have been issued for Scotland and parts of northern England on Wednesday.
The Met Office’s deputy chief meteorologist, Steven Keates, said: “A deepening area of low pressure will approach the UK from the southwest later on Monday, bringing with it heavy rain and strong winds, which are likely to affect the UK between late Monday and early Wednesday.
“The exact track, depth and timings of this low are uncertain, which makes it harder to determine where will be most impacted by strong winds and/or heavy rain.
“This system has the potential to cause disruption, and severe weather warnings are likely to be issued over the weekend as details become clearer. We therefore urge people to keep up-to-date with the latest Met Office forecast.”