Chart of the Day: Office Vacancies Indicate Business is Battening Down the Hatches

Contact Your Elected Officials
Right Wire Report Header

Office vacancy levels are approaching highs last seen during the savings and loan crisis in the 1980s. It appears that a reckoning in the office market, widely anticipated since the start of the pandemic, is upon us.

  • “We’re not ready to say that this is a cliff for the office sector. But I think right now we’re finally entering the true turbulent times,” Thomas LaSalvia, director of economic research at Moody’s Analytics, told Axios.
  • Vacancies refer to the share of office space that is not leased by a tenant – as opposed to leased office space that’s mostly deserted.

See this in the chart below and learn more here.

At the end of last year, even Class A buildings saw a drop in occupancy, per a new report from Moody’s.

  • Some office landlords are showing signs of distress, as the WSJ reported. Brookfield Asset Management last month defaulted on $750 million in debt on two 52-story office towers in Los Angeles (It still holds hundreds of properties).
  • These properties were Class A but faced competition from even-fancier Class A+ properties with better amenities, according to Moody’s report. Brookfield’s moves might “spur other landlords,” it says.
  • Meanwhile, Columbia Property Trust recently defaulted on a $1.7 billion loan backed by seven office properties, mainly due to the rise in interest rates.
  • The company took out a floating-rate loan in December 2021, according to Moody’s. It’s gone from paying around 3% on loans to 6%.

Rather than lay off workers during a time of labor shortages, companies are looking to real estate as a way to cut costs. Reducing office space appears to be the cost-cutting tool of choice.

See more Chart of the Day posts.

By Tom Williams

Read Original Article on

Biden Doesn't Have Americans Best Interest At Heart