The topsy turvy world of commercial real estate!
First, vacancy rates are rising fast in US shopping malls. Not surprising given the consumer trend towards on-line shopping.
Second, coworking demand is leading to a changing face of office spaces. Take Washington DC, for example.
The continued expansion of coworking companies drove strong absorption in D.C.’s office market in the first quarter, counteracting negative forces such as consolidation of law firm footprints and a slowdown in federal government leasing.
Of course, San Francisco leads the US is most coworking spaces, followed by Miami, Atlanta and Washington DC.
Speaking of commercial real estate and CMBS. the five largest loan losses in the CMBS space were reported by Trepp. Not surprising, the leader in March 2019 is a shopping center.
The REO Independence Mall asset accounted for 66% of the total realized losses for the month with a write-off of $149.7 million. That loss ate into 74.9% of the $200 million face amount tied to the asset, and is the largest loss ever incurred by a retail CMBS loan. Located in suburban Kansas City, Missouri, Independence Center is a 1 million-square-foot superregional mall and 398,000 square feet of that space served as collateral. The mall was sold to California-based International Growth Properties for $63.3 million last month, which marked a significant discount from its most recent valuation of $104.5 million. Following a maturity default in May 2017, special servicer commentary revealed that increased competition and economic challenges made it difficult for tenants to increase sales at the property. The loan represented 52.4% of the remaining collateral behind the WBCMT 2007-C33 deal. That deal has now lost 11.5% of its original balance to disposals.