Skip to main content

American offices are half-empty. That could be the next big risk for banks. (CRE. )

Analysis by Julia Horowitz, CNN

"LondonCNN — 

From Dallas and Minneapolis to New York and Los Angeles, offices sit vacant or underused, showing the staying power of the work-from-home era. But clear desks and quiet break rooms aren’t just a headache for bosses eager to gather teams in person."

"Investors and regulators, on high alert for signs of trouble in the financial system following recent bank failures, are now homing in on the downturn in the $20 trillion US commercial real estate market."

"America’s top banker, JPMorgan Chase (JPM) CEO Jamie Dimon, told CNN Thursday that he couldn’t be sure whether more banks will fail this year. Yet he was quick to point out that the current situation was very different to the 2008 global financial crisis, when there were “hundreds of institutions around the world with far too much leverage.”

"You have fundamentals under pressure from work from home at a time when lending is less available than [it has been] over the last decade,” said Rich Hill, head of real estate strategy at Cohen & Steers. “Those two factors will lead to a pretty significant decline in valuations.”

"Earlier this year, a landlord owned by asset manager PIMCO defaulted on nearly $2 billion in debt for seven office buildings in San Francisco, New York City, Boston and Jersey City."

"Signature Bank (SBNY) had the tenth biggest portfolio of commercial real estate loans in the United States at the start of the year, according to Trepp. First Republic (FRC), which received a $30 billion lifeline last month from JPMorgan Chase and other major banks, had the ninth largest."

"About $270 billion in commercial real estate loans held by banks will come due in 2023, according to Trepp. Roughly $80 billion, nearly a third, are on office properties."

"The worst outcome, according to Neil Shearing, chief economist at Capital Economics, is that a “doom loop” develops. Questions about the health of banks with sizable exposures to commercial real estate loans cause customers to pull deposits. That forces lenders to demand repayment — exacerbating the sector’s downturn and further damaging the banks’ financial position. That triggers more deposit outflows in a “vicious cycle.”

SOURCE:

https://www.google.com/amp/s/amp.cnn.com/cnn/2023/04/10/business/commercial-real-estate-banks-offices/index.html



Comments

Post a Comment

Popular posts from this blog

UBS SHARES FELL AFTER A REPORT OF COMPLIANCE FAILURE AMID RUSSIAN CLIENTS

https://drive.google.com/file/d/18EvHeQCCcRJJPEaonc8pby64KA6fD0Xh/view?usp=drivesdk   "ZURICH, Sept 27 (Reuters) - UBS shares fell on Wednesday after a report that the U.S. Department of Justice has stepped up scrutiny into alleged compliance failures that helped Russian clients evade sanctions . UBS declined to comment to Reuters when asked for a response to the Bloomberg News report, which said the alleged compliance failures related to UBS and Credit Suisse, which was taken over by its larger rival UBS  (UBSG.S)  earlier this year." " Trading in UBS shares was temporarily  halted  after they fell nearly 8% following the report. The Swiss bank's shares later recovered to trade 3.3% lower at 1500 GMT." SOURCE: https://www.reuters.com/business/finance/ubs-credit-suisse-face-wider-us-probe-over-russia-sanctions-bloomberg-news-2023-09-27/
Post a Comment
Read more

TAMING INFLATION WHILE BEATING THE ECONOMY RESULT IN BANKING CRISIS , PREDICTION OF A SEVERE RECESSION IN 2023

" Around this time last year, Nouriel Roubini, the famed economist who has earned the sobriquet  Dr. Doom  on Wall Street for his gloomy outlook on markets, warned that it would be “ mission impossible ” for the U.S. to avoid a severe recession in 2023." " The comments mark a big shift in tone from Roubini, who in July 2022 said that his peers predicting a short and shallow recession at the time were “ totally delusional .” But a lot has changed since last July. Fed Chair Jerome Powell has managed to cool inflation to from its 9.1% pandemic-era high to just 3.7%, all while maintaining U.S. GDP growth; supply chains, which were thrown into chaos during the pandemic, have mostly  healed ; and despite a short-lived regional banking  crisis  in March, the S&P 500 is up over 16% year to date." SOURCE: https://fortune.com/2023/09/18/dr-doom-nouriel-roubini-short-shallow-recession-soft-landing/
Post a Comment
Read more

IMEC. LACKS LOGICAL JUSTIFICATION.

 "Critics argue that India’s new corridor lacks logical justification. India opting for a rail and shipping corridor when the existing and cheaper Suez Canal and maritime routes are available does not make sense . Secondly, building railways through desert terrain requires elevated tracks with deep support to withstand shifting sands and hard bedrock. The political landscape in the US adds another layer of uncertainty, as opposition to investment in this corridor could increase if the Biden administration loses power. The Republicans, on the other hand, would oppose putting money into a failing project just like they did not want to put money into the Ukraine war. On the other hand, the US and India have previously announced initiatives like the Chabahar Corridor, the International North-South Corridor and the US Blue Dot Network, but the status of these projects remains uncertain." "...Moreover, IMEC passes through Jordan and Israel, introducing complex geopolitical ch
Post a Comment
Read more