When the lights go out in the city!
CEO, Fiori Financial Group, Financial Advisor, RJFS
205 SE 20th St, Fort Lauderdale, FL 33316
According to the federal reserve data, U.S. commercial property debt climbed to an all-time high of $3.06 trillion. Working from home for many is likely here to stay. While the eviction moratorium is a band-aid for the tenants, it’s slowly destroying the landlord. At some point, the banks are going to see an increase in defaults of commercial loans. What about the retail space and the restaurants that closed on the first floor of those towers? Fast forward to the end of the forbearance period granted by banks, which was meant to be a lifeline in the short-term. What happens then? Those commercial owners are still not collecting rents from the reduction of office space needed by companies that keep some of their workforces at home.
Who pays the CAM for those empty offices? Vacancies will likely rise, keys will be turned in, and the sharks will circle the distressed real estate market as they did in the ’80s and ’90s. Unfortunately, the pain will not stop there. The lack of tax collected from these buildings will bleed the city’s budgets. Along with the empty hotel rooms which in some cities like New York is a significant contributor of tax receipts. Delinquency rates will continue to soar, and values will plummet even more. It is a complete culture shift that will take years to work through. Private lenders and BDCs should fare well in this type of environment, along with warehouses, data centers, self-storage spaces because of the cultural changes.
Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Fiori Financial Group is not a registered broker/dealer and is independent of Raymond James Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Margaux Fiori, CEO, Fiori Financial Group, Financial Advisor, RJFS and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results.
Phone: 954-763-2600 Address: 205 SE 20th St, Fort Lauderdale, FL 33316