– Facing “Unprecedented Challenges” And Soaring Rates, PIMCO-Owned Landlord Defaults On $1.7 Billion In Office Mortgages:
Amid the recent record surge in interest rates, the residential housing market may have frozen – as the gap between bids and asks stretches to unprecedented levels – but it is hardly in freefall, courtesy of several years of ultra-low rates which allowed homeowners to lock in low rates for the foreseeable future, even if it means aspiring and new homeowners remain locked out indefinitely of a housing market that has never been more unaffordable (and instead are forced to rent).
But while the residential housing market may be relatively immune against the adverse consequences of soaring rates – if only for a finite period of time – the same can not be said about commercial real estate, where the impact of higher (or lower) rates is transmitted much faster. It’s also why the commercial real estate sector is seeing unprecedented pain. A recent example was the bankruptcy of the iconic Times Square Crowne Plaza hotel, located at 1601 Broadway, which as we noted two months ago, reported some 88,000 square feet, or 45% of the office space at this address, was vacant, forcing owners Vornado Realty Trust to take a big L on the property.
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