San Francisco office buildings ended 2023 on a whimper, seeing 53.1% less traffic in December than they did four years ago, according to the latest nationwide office index from Placer.ai.
Office visits in San Francisco ranked well below the national average, which was 36.5% below levels four years ago, even though many employers mandated more in-person work days, according to Placer.ai data scheduled to be released Wednesday.
be seen: The office space market in San Francisco is booming. As long as it's on a high floor with a view.
However, New York City was the bright spot, with office buildings seeing foot traffic just 19.2% lower than in December 2019, roughly three months before nationwide pandemic lockdowns were imposed, ushering in more flexible work arrangements. .
Office buildings in New York City were seeing significantly more traffic from office workers at the end of 2023 than the rest of the country.
The New York Real Estate Board has for months been relying on mobile data from Placer.ai, which suggests a much stronger rebound for New York's office market, especially in high-end buildings, than Kastle System's back-to-work metric reflects through key-card swipes. .
However, office buildings remained on the front lines of the struggling U.S. commercial real estate industry, with vacancy rates reaching 19.6% in major cities in the fourth quarter, according to Moody's Analytics, the highest percentage in at least four decades.
Borrowers with loans maturing recently saw a respite from rising financing costs as the benchmark 10-year Treasury yield BX:TMUBMUSD10Y fell below 4%, largely due to expectations that the Federal Reserve will cut interest rates in 2024.
But property values in major cities were also hit, with office buildings in central business districts leading the way lower with an estimated 26% decline in November compared to the previous year.
be seen: The report showed that office buildings in major cities recorded a 26% decline in prices compared to last year
Office and multifamily property owners have often benefited from some of the lowest borrowing costs in the industry in the past decade, which can make refinancing outstanding loans difficult.
Office loans maturing this year that were bundled into bond deals had a weighted average coupon of 4.73%, versus nearly 5% for hotel loans, according to Bank of America Global data.
“The extent to which a particular asset is reset (if at all) will of course depend to some extent on particular factors, including when the property was last
“It is renovated, whether it is located in a desirable and safe location, and whether the loan on the asset has a near-term maturity,” Alan Todd’s CMBS research team at BofA Global said in a note Friday to clients.
is reading: “No one throws good money after bad money.” Why 2024 looks like a problem for commercial real estate.
