Four years after COVID-19 filled hospital emergency rooms, closed schools and emptied out cities, U.S. offices remain about half vacant, Bloomberg News reported. Office occupancy in 10 of the largest U.S. metropolitan areas rose to a new high of 53% for the week ended Jan. 31, according to Kastle Systems, a firm that provides security to buildings. The firm’s barometer on how corporate return-to-office policies is going has been hovering around that level for 13 months. Yet, cities are shrugging off empty offices and its implications for the commercial real estate market because they can, for now. “Commercial real estate is not a key driver of general fund revenues for the majority of local governments,” said Michael Rinaldi, head of U.S. local governments at Fitch Ratings, in an email. “Declines can be managed through careful expenditure management and/or stability in other revenue sources, including residential property taxes, sales tax, utility taxes, etc.” The reluctance or in some cases refusal of workers to return to offices has shaken the real estate market, with New York Community Bancorp being cut to junk this week by Moody’s Investors Service after it said it was slashing payouts and stockpiling reserves to cover troubled loans tied to commercial real estate. Read more.
ABI will be presenting a program that will address CRE exposure: the 2024 Distressed Real Estate Symposium, to be held April 30-May 2 in Ojai, Calif. Details and registration information will be posted soon at abi.org/events.