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Soaring borrowing costs and plunging prices walloped the global commercial-property market last year. Now, more clarity around values and an urgent need to address looming debt maturities are expected to spark more deals, Bloomberg News reported. Sellers and buyers are finally seeing more opportunities to transact after uncertainty nearly froze the market for much of last year. The average number of bids per deal climbed 16% in November 2023 from the end of 2022, according to Jones Lang LaSalle Inc. And the opportunity may be vast: The brokerage estimates that property owners with loans maturing through the end of 2025 will need as much as $570 billion in new equity given how sharply values have fallen. With some central banks starting to signal that the rapid rate-hiking cycle is winding down, investors have gained more insight into borrowing costs. And several real estate deals — including the sale of roughly $33 billion in commercial-property debt from the failed Signature Bank — have also provided more transparency on values. The clarity is starting to spur some optimism in the beleaguered market. The market still needs to see a longer period of stability with interest rates to fully unlock the capital that’s on the sidelines, according to JLL. And many owners may wait to transact until values stabilize even more or potentially start rising. But with more than $3 trillion of property around the world that has debt set to mature through 2025, many owners need to figure out what to do with certain properties and debt in the coming months, according to JLL.

The owner of mixed-use building Bloom on 45th in Manhattan has filed for bankruptcy, saying fallout from the COVID-19 pandemic as well as interest-rate hikes have made it unable to meet its debt obligations, WSJ Pro Bankruptcy reported. Hudson 888 sought protection from creditors Sunday in the U.S. Bankruptcy Court in Manhattan after it failed last Friday to reach a debt-restructuring settlement with a secured lender owed a total of $79.8 million. The property, at 500 W. 45th St., was built in 2020. Roughly 60 residential units of the 92-unit luxury condo property in Hell’s Kitchen are unsold. “As a result of the pandemic restrictions in place for more than two years, residential sales of the project did not meet the projections” of the owner and original lenders, Hudson 888 Chief Executive Sheng Zhang said in a filing. When pandemic restrictions started easing in 2022, the Federal Reserve began successive interest rate hikes to combat inflation. “Those increases in interest rates caused mortgage rates to increase, which put downward pressure on the condominium sales market,” the CEO said in the filing. Hudson began defaulting on its debt in late 2022.

Detroit-based builder MiG Construction filed for bankruptcy last month, according to a court filing in U.S. Bankruptcy Court for the Eastern District of Michigan, following legal disputes at a $30 million job in the city and debt to its subcontractors, ConstructionDive.com reported. The firm faced issues on the Dreamtroit project, a $30 million affordable housing development that MiG is contracted on. MiG filed a lien against Dreamtroit’s developers, alleging they owed the builder $3.28 million, while subcontractors lined up to demand their own payments from MiG. All told, the construction company reported it had between 100 and 199 creditors, according to the Dec. 19 bankruptcy filing, with $6.28 million in total liabilities. However, MiG noted that funds would be available for distribution to unsecured creditors.

A subsidiary of Chinese developer Xinyuan Real Estate Co Ltd. has filed for chapter 11 protection in the Southern district of New York court, according to a court filing, Bloomberg News reported. Hudson 888 Owner LLC, whose business is “single asset real estate,” filed the petition, according to the court document dated Sunday. Its estimated liabilities and assets are both within the range of $100 million to $500 million, the filing shows. Hudson 888 Owner is a US unit of Xinyuan, according to a document on the SEC website. Like many distressed Chinese developers, Xinyuan fell into distress in 2022 and didn’t make an interest payment in October that year. It did a dollar debt exchange in June 2023 and hired Alvarez and Marsal as its restructuring adviser.

America’s offices are emptier than at any point in at least four decades, reflecting years of overbuilding and shifting work habits that were accelerated by the pandemic, the Wall Street Journal reported. A staggering 19.6% of office space in major U.S. cities wasn’t leased as of the fourth quarter, according to Moody’s Analytics, up from 18.8% a year earlier. That is slightly above the previous records of 19.3% set in 1986 and 1991 and the highest number since at least 1979, which is as far back as Moody’s data go. The new record shows how remote work has upended the office market. But that is only part of the story. Much of the market’s current malaise traces its roots to the office-market downturn of the ’80s and ’90s. That surge in office vacancies in the 1980s and early 1990s followed years of overbuilding. Easy lending fueled a construction boom, particularly in the South where land was cheap and red tape sparse. Banks often financed speculative office projects that didn’t have any tenants signed up. “The building I built was almost a million square feet—100% empty,” said developer Bruce Eichner, who built the Manhattan office tower 1540 Broadway in the 1980s. The result was a glut of office buildings that couldn’t find tenants when the economy went into recession in 1990 as the country suffered from the savings-and-loan crisis, when many S&Ls failed. That glut weighs on the office market to this day and helps explain why vacancies are far higher in the U.S. than in Europe or Asia. Many office parks built in the 1980s and earlier struggle to find tenants as companies cut back on space or leave for more modern buildings.

JER Investors Trust Inc., a mortgage REIT, filed for bankruptcy in the latest sign of distress in commercial real estate, Bloomberg News reported. The real estate investment trust — which counts private equity firm C-III Capital Partners among its top shareholders — owes more than $100 million to creditors, but has less than $50 million in assets, according to a chapter 11 petition filed in Wilmington, Del., on Friday. JER Investors manages a portfolio of mortgage backed securities and other types of debt tied to the commercial real estate market, according to the company’s website. As interest rates climbed this year, commercial properties came under pressure, especially firms that lost tenants during the pandemic as office-tower workers stayed home. Earlier this month, mall owner Pennsylvania Real Estate Investment Trust filed for bankruptcy for the second time in three years. In November, the coworking behemoth WeWork Inc. filed for bankruptcy with plans to cut back a sprawling real estate portfolio that spanned 39 countries. C-III Capital owns at least 8.4% of JER Investors, according to court papers. JER also owes C-III nearly $20 million, the bankruptcy filing shows. The Bank of New York Mellon Trust is owed $93.9 million, according to the chapter 11 petition.