Tuscan Townhomes for Memorial Dr., French Chateau Apartments for West Gray; Testing Door-to-Door Metro Bus Service


Photo of Main St. downtown: jsulak via Swamplot Flickr Pool


2 Comment

  • I disagree that new multifamily is the most exposed sector of commercial real estate and that older complexes will be in any way better-positioned to ride out the turmoil. There will be heavy concessions to fill up these new complexes, and yes, those that have been underwritten too aggressively are going to go back to the bank; but as a sector what will happen is that they’ll fill up with tenants that would’ve otherwise gone to older complexes, and those older complexes are going to have to respond to the new price levels that have been ‘discovered’ by the newer complexes. Those older complexes that have been recently purchased or refinanced on favorable terms may find themselves distressed and their less savvy and less deep-pocketed owners are going to be challenged to keep things up. Most of these effects are going to be accurately indicated by market data. Apartment market data is the easiest to track.

    As bad as that sounds, I expect worse outcomes for the office sector. Its just that those outcomes will be measured differently because office space doesn’t get leased or used in units but rather in irregular blocks of square footage. In addition to a glut of space directly for lease by landlords, there will be numerous blocks of sublease space that come to the market, big and small, often awkwardly configured for a previous user’s proprietary operations. Lease terms are going to get quietly renegotiated with many tenants. Some office assets will escape fairly unscathed, others will have lease expirations that are timed very inconveniently. Lenders are going to feel the hurt, too, and make loan modifications, give forbearance, or take back some buildings. Meanwhile, so much has been made about the new Exxon campus that most people have forgotten that the bulk of the space that’s getting filled there is going to act to increase vacancy elsewhere, most notably in Greenspoint and Downtown. This is how it is. Office is by its nature a more volatile market; however, it is not always easy to discern that. The market data captures much less of the full picture of distress. The distress is far more granular, very asset-specific.

  • I don’t remember seeing a lot of synthetic stucco facades and streets lined with rows of garage doors when I was in Tuscany. I guess I went to the wrong part.