Weitz Commercial - Real Estate and Investments

12/30/2025

2026 Local and National Market Predictions. Happy New Year all!

Snohomish County Commercial Real Estate

11/05/2024

That's a lot of money "for people accused of a crime but require mental help" prior to trial.

The expected project cost has sharply increased over the last year.

03/06/2024

Interesting interview with RXR CEO Scott Rechler. Some key takeaways....

"A trillion dollars of commercial loans are coming due this year".

"The slow motion train wreck hasn't 'left the station".

"The challenges haven't been dealt with".

"There has to be acknowledgement of prices. The values being used by banks are in flux".

Snohomish County Commercial Real Estate News

02/15/2024

This is staggering if accurate. Nearly 1/5th of outstanding commercial real estate debt is set to mature this year according to Mortgage Bankers Association.

So the options for building owners are:

1) extend the loan;
2) sell; or
3) re-finance (not really an option at current rates for most).

Buckle Up. This could get interesting. I don't see a pot of gold at the end of this rainbow.

The value of loans set to come due is up 40% from an earlier $659B estimate by the Mortgage Bankers Association.

02/05/2024

60 minutes interviewed Fed Reserve Chairman Jerome Powell and the interview aired this weekend.

The details:

Powell committed to not decreasing rates until the rate of inflation lowered to around 2%.

He says price stability is the main focus of Fed.

He acknowledges the Fed was too slow to raise rates and his previous calls that inflation was ‘transitory’ were not accurate.

“Not likely” rates will be lowered in Fed Committee Meeting in March.

“Prices will not decline” (referring to basic good essentials, etc).

US Debt / fiscal situation is ‘unsustainable’.

He suggests the first interest rate cut will come around the middle of the year.

Our take: I’ll refrain from any truly harsh opinion on this interview. It does feel like a bit of a puff piece, and I remain skeptical as to how long the economy can sustain these interest rate levels without feeling considerable pain. As is, the real estate market feels stagnant which helps prices remain at current levels, but puts pressure on all the businesses serving those particular industries. Just as he admits he was ‘too late’ to quell inflation, I believe they will be equally as late to lower rates, but time will tell.

Federal Reserve Chair Jerome Powell gives his thoughts on inflation risks, the economy, the timeline for cutting rates, the health of the country's banks and more. Scott Pelley reports.

01/30/2024

I'll generally stay away from stock market posts, but this is fascinating.

4 big major corporate earnings reports today as we begin a stretch of earnings reports:

1) Tesla: "weak quarterly numbers, worrying earnings call with no guidance".

2) Intel: "Weak quarterly numbers; uninspiring Q1 guidance"

3) Levi's: "ugly performance; new CEO laying off 10 to 15% of workforce"

4) Citi: "all-around dreadful earnings as CEO restructures banks including thousands of layoffs".

What did the market do? All- time highs on the S&P. Something feels fishy here.

Nothing gets better overnight at public companies. It takes time.

01/16/2024

Interesting piece from 60 Minutes on current commercial office space issues and potential banking issues stemming from it.

Hybrid work has put office building owners in a bind and could pose a risk to banks. Landlords are now confronting the fact that some of their office buildings have become obsolete, if not worthless.

01/11/2024

The most long standing and powerful big banker in the world raising some red flags....

"You see that in equity prices, credit spreads being very narrow. But the extra money that [consumers] got during COVID, trillions of dollars, that's kind of running out. It's been pushed out for a whole bunch of reasons but it runs out this year".

"All of us in business have to learn to deal with the ups and downs of the economy. But I do think the cross-currents are pretty high: the money running out, rates are high, QT (quantitive tightening) hasn't happened yet."

Some common developments between 1970s and 2024 include large fiscal deficits, huge government spending, and changing trade flows.

01/09/2024

In an effort to keep our posts as objective as possible, here’s a positive report from the Yahoo Finance about “Housing Confidence”.

Americans haven’t felt this optimistic about the housing market in 20 months, a new survey found, but still-high home prices may threaten to blunt that re-emerging confidence.

Of course, in the era of horrific journalism, no actual study was cited and the writer goes on to say the following:

"Though mortgage rates seem to be on track to continue to decrease, that hasn’t been enough to bolster most would-be buyers' spirits. Some 83% of consumers surveyed indicated that it’s a bad time to buy".

"Notably, homeowners and higher-income groups reported greater optimism than renters," Palim said. "For the first time in our National Housing Survey’s history, more homeowners, on net, believe mortgage rates will go down than go up."

WC- It's all a bit short sighted to think that this proposed rate reduction will lead to great days ahead. Even if rates went to 5%, we are still way above rates just a couple years ago which means purchase power is way down when taken into account the average person.

As we have said, it's all about inventory and that either stays flat, or alternatively, there is only one way for that to go considering we are down dramatically from any recent historical norm.

Only time will tell....

In December, 31% of consumers said they expect mortgage rates to fall within the next 12 months.

01/08/2024

The title says it all, but here are key facts for those that can't access the WSJ paywall.

"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".

WC- Obviously, this is something we expected and expect to continue. For those who haven't signed a commercial lease before, it's very common for a large commercial lease to to 5, 7, 10 years or sometimes even more. COVID obviously changed the dynamic partly in part to things programs like Zoom, Teams, etc that allow for meetings from your living room and changed the dynamic of the necessity for a central meeting HUB. We think this trend will continue and become even more exaggerated for better or worse.

Couple that with the invent of and increased utilization of AI technology and the 1) the need (or lack thereof) for certain employment skill sets, and 2) AIs effects in being able to accomplish administrative tasks, and we have a real issue with the number of employees/ space a business needs to function.

Simply put, the days of corner offices with your family pictures and keepsakes behind you is gone. Bring on 'plug and play' where you plug your computer into a multi-functional workspace and work from there.

Certainly, there will be some industries/ businesses that utilize office space more than others, but as these older leases come up from renewal in the next 3-5 years, we believe downsizing is/ will be the future.... especially when you take into account the $/ SF that the market was dictating prior to COVID and seeing even now.

The rent rate Tug-O-War between LLs and Tenants will certainly continue but the leverage will most likely lie with the tenants in most markets in the coming years. If that's true, that means lower NOIs for Landlords, more difficulty in refinancing with lower valuations (not to mention higher interest rates if rates down fall) and everything that comes with those challenges.... very little of which can be described as good for Landlords, valuations, and lenders.

The 19.6% of office space that isn’t leased in major U.S. cities is the highest since at least 1979.

12/27/2023

PREDICTIONS FOR 2024

As we approach the conclusion of 2023, I thought it would be fun to put together some predictions for the coming year so as to follow and track in the coming year(s).

I’m obviously not the most optimistic on certain markets in 2024, and frankly I feel like like living in a different world than many of the pundits on the business news outlets these days. With that said, it will be fun to see how these stack up vs. others (which I’ll try and post in the coming days/ weeks) that I see.

1) The country will face major political turmoil. I don’t care what side of the aisle you are on, emotions will run extremely high as we approach November elections. I don’t recall a time when the political sides were so divided. I sure hope we find a way to resolve that and some strong leadership. That said, for a variety of reasons, it sure seems like a Biden / Trump rematch is in the works and as such, emotions will be extremely high. I’d also not be surprised if a lessor known option like RFK, Gavin N or Vivek R. make a push late.

2) Interest rates will begin to fall, but not dramatically and too late. I believe the inflation talk will turn into a recession/ negative GDP growth by 2nd or 3rd quarter and rates will be lowered by the Fed as a result.

3) Real Estate inventory on the residential side will start to grow from current lows. I think many 2nd homeowners, retirees, perhaps people either just wanting to take profits or who face distress which I classify as financial, death, divorce will start to list their homes. This will put the supply/ demand into a more normal / historical position. I wouldn’t be shocked to see a significant inventory increase and a months of supply increase that will start to taper prices across the country…especially in 2nd home areas and major cities. I already see it in vacation towns.

4) Office Space will continue to face head winds. As lease renewals continue to take shape and companies seek to lessen their office space footprint, office space is in for more turmoil in major cities.

5) Unemployment will rise as companies continue to ‘streamline’ or work toward ‘productivity’. Ie. Companies don’t want to engage employees that don’t move the needle of which there are many and will utilize AI and other technology to take those jobs. While the ‘jobs’ report is misleading at best and fraudulent at worst, it will be clearly apparent that many more jobs are disappearing than being created…especially high paying ones.

6) The discussion of the US Dollar with BRIC backed reserve currency will begin to take shape and won’t be positive for the USD unfortunately.

So there you have it…I’ve not been this pessimistic on economic affairs since ’08, and this could end of up similar or perhaps worse than that stretch. Being nimble, unleveraged if possible and build as big of war chest as you can as opportunities will be out there is the key. I don’t necessarily think 2024 will be the worst of things, but I do believe it will be the start of what will be a challenging 3-5 years for many industries. It is our strength as local and national communities and ability to work through challenges that will be put to the test. Hopefully, we can put political differences aside and work through those issues.

This period of time may even end up changing the way in which a lot of industries / economies operate from Federal/ State programs/ funding, to larger programs like the ‘Green New Deal’ and others (ie. Socialist concepts vs. Capitalist concepts). I’ll also note that none of this is based on political opinions or projection. Whichever party has leadership will be faced with some difficult discussions. We were VERY lucky in ’08-’12 to have leadership like Ben Bernanke and Hank Paulson running the Fed and Treasury respectively. Frankly, they saved a great depression in my opinion. Unfortunately, I personally don’t have as much faith in Jermone Powell or Janet Yellen, but I hope they prove me wrong. The monetary decisions our government makes will dictate the financial future of our country (for better or worse).