The commercial office sales market has been very slow, with investors purchasing only $10.7 billion worth of office property in Q1 2023, which is down 68% from Q1 2022.
The higher interest rates have also squeezed margins out of the commercial sector, making it much more difficult for landlords to refinance, fund building improvements and attract new tenants.
Commercial property owners, especially in states that have experienced population losses such as California, New York, and Illinois, are starting to unload office buildings at bargain-sale prices.
Black Eye for Blackstone
Recently, even Blackstone sold the Griffin Towers office complex in Santa Ana, California for $82 million, which was approximately 36% less than the firm paid in 2014, according to some sources.
Also a tower at 350 California in San Francisco, valued at $300 million in 2019, is expected to sell for about $60 million, or 80% below what it was valued at.
The commercial property market continues to retreat, as it had done during the pandemic.
The rise in the number of distressed sales in commercial real estate points to a more prolonged trend, according to industry experts, as billions of dollars’ worth of mortgages need to be refinanced.
Office inventory continues to grow as once hungry investors look for an exit, putting pressure on the office market in general.
In Q1 2023, 26 office buildings were taken over by creditors in foreclosure actions, compared with six in the first quarter of 2022, according to MSCI.
And delinquency rates of office loans that were converted into commercial mortgage-backed securities increased to 2.77% in April, the highest rate since August 2019.
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Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single-family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.
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